The Chapter 11 trustee for New England Compounding Pharmacy Inc. and other parties in the case have reached a settlement that would provide $100 million to compensate victims of a deadly meningitis outbreak.
According to Monday, Dec. 23, releases from the official committee of unsecured creditors and a plaintiffs' steering committee, the debtor will fund the $100 million compensation fund with cash contributions from its owners, proceeds from insurance, tax refunds and the sale of a related business. The settlement requires bankruptcy court approval, but NECC has not yet filed a settlement motion with the U.S. Bankruptcy Court for the District of Massachusetts in Boston.
The Centers for Disease Control and Prevention have estimated more than 700 people have been diagnosed with fungal meningitis or other ailments, with 64 confirmed deaths, from the debtor's contaminated steroid injections. Judge Henry J. Boroff of the Boston bankruptcy court has set a Jan. 15 deadline for victims to submit proofs of claim.
Despite the settlement, NECC's owners "deny any liability or wrongdoing" but "strongly desire to play a major role in establishing a fund for people who died or suffered as a result of this tragic outbreak."
Anne Andrews and Harry Roth, co-chairs of the creditors' committee, called the settlement a "critical milestone in our efforts to maximize recovery for the victims and their families."
In the same statement, Chapter 11 trustee Paul Moore said, "We are pleased that a significant amount of funds will become available for distribution to victims and their families as compensation for the deaths, injuries and suffering they endured as a result of this tragic meningitis outbreak."
Lead counsel for the plaintiffs' steering committee, Thomas M. Sobol of Hagens Berman Sobol Shapiro LLP, noted in another statement the settlement does not mark the end of litigation over the meningitis cases.
"Litigation will continue against medical clinics, doctors, hospitals and other companies who were hired by NECC that bear responsibility to those who were badly injured or who died horrible and painful deaths as a result of having the injection of the tainted product into their bodies," he said.
NECC filed for Chapter 11 on Dec. 21, 2012, in the wake of numerous lawsuits stemming from the deadly meningitis outbreak caused by its products.
Counsel to the creditors' committee, William R. Baldiga of Brown Rudnick LLP, was not available for comment. Jeffrey D. Sternklar of Duane Morris LLP is debtor counsel.
Intermediate Capital Group hires Andrew Hawkins, Christophe Browne and Ricardo Lombardi to hunt zombie funds. For other updates launch today's Movers & shakers slideshow.
The three operators are on a losing streak and it's not clear whether their luck will change. More video