Opioid maker Endo’s $98 million bonuses delayed in bankruptcy court
A bankruptcy judge on Thursday approved the payment of $93,000 in short-term incentives to employees and sales representatives of Malvern’s Endo International, but delayed a broader ruling on big bonuses to company insiders and to others.
Endo, one of the nation’s largest opioid makers, paid $94 million in bonuses to its top executives and high-level employees before filing for bankruptcy in mid-August, and the company offered in its restructuring plan another $98 million in bonuses for Endo employees this year, according to court documents.
A federal bankruptcy watchdog and a committee of opioid victims say the bonuses are draining Endo’s financial resources as he faces 3,100 opioid lawsuits.
Lawyers for the committee estimate there could be 600,000 victims of Endo’s opioid painkillers and say Endo has set aside virtually nothing for them.
Endo, best known for Percocet, sold Opana for severe pain. The pharmaceutical company pulled Opana from the consumer market in 2017 due to the potential for abuse and addiction.
Former Tennessee Attorney General Herbert H. Slatery III claimed in a 2019 lawsuit that Endo was “essentially responsible for the opioid epidemic in Tennessee” when Opana pills flooded parts of the state. State.
Bankruptcy Judge James L. Garrity Jr. approved the $93,000 in incentives for Endo employees as the drug company continues to operate and scheduled a bounty hearing for Nov. 10. Eighty lawyers attended Thursday’s 40-minute hearing.
Critics of the bonuses have argued with the company over who should be designated an Endo “insider” and whether they can claw back the bonuses if it is determined that the individual has participated in criminal activity involving opioids at Endo.
Susan Arbeit, attorney for the US trustee watchdog, said the trustee may question Endo’s human resources director, Tracy Basso, about how she categorized insiders with respect to bonus payments. Basso described in a court filing outlining about 1,500 employees in the bands, from those with the highest responsibility to those with the lowest, or from the general manager to administrators, operators and technicians eligible for overtime. She identified 21 insiders.
On August 16, Endo filed for bankruptcy with just over $1 billion in cash and billions of dollars in debt.
A group of Endo lenders owed about $6 billion and are offering to acquire the drug company in a “hunt bid” at a bankruptcy auction, court documents show. They will bid for Endo what is due to them. Endo has a large drug portfolio with facilities in the United States and India. If successful, they will own the pharmaceutical company, but without the legal liabilities of opioid lawsuits.
To settle opioid liability, Endo’s buyer would create three trusts with approximately $550 million over a decade. Funds would be distributed among states and government entities, private victims such as individuals and hospitals, and Native American tribes in this manner: $450 million for states and government entities, $85 million for victims private and $15 million for Native American tribes.
A group of state attorneys general have described pre-bankruptcy bonuses given to Endo executives in court documents as “secret” and “excessive.”
A filing by opioid victims, officially the Opioid Claimants Committee, says the average non-executive Endo employee will receive 31 times more bonuses than the current restructuring proposal provides for opioid claimants. private.
On Thursday, Garrity also approved the sale of an Endo facility in Chestnut Ridge, NY, for $19 million.