Bankruptcy Court Could Take Up Meningitis Settlement Soon

Attorneys working to settle litigation over a deadly fungal meningitis outbreak say they hope to finalize a tentative $100 million-plus deal and present it for court approval in the next two months.

At a Friday afternoon hearing, attorney Michael Gottfried told the U.S. District Court in Boston that “substantial progress is being made” toward finalizing a settlement.

The New England pharmacy, which faces litigation related to the outbreak, last month tentatively agreed to create a fund to pay more than $100 million victims and their families. According to the Centers for Disease Control and Prevention, 64 people have died and about 700 others have fallen ill as a result of the outbreak.

“It’s the trustee’s goal to file a motion with the bankruptcy court to have those settlements approved in the next 30 days or so,” said Mr. Gottfried, who is representing the pharmacy’s bankruptcy trustee, Paul Moore. “A hearing might be scheduled on that 30 days or so after he files the motion.”

“It’s the trustee’s goal to file a motion with the bankruptcy court to have those settlements approved in the next 30 days or so,” said Mr. Gottfried, who is representing the trustee, Paul Moore. “A hearing might be scheduled on that 30 days or so after he files the motion.”

Following the necessary approvals, lead victims lawyer Thomas Sobol has previously said that victims or families could start getting checks from the proposed settlement fund within the year.

The pharmacy, New England Compounding Pharmacy Inc., filed for Chapter 11 protection in December 2012 after the CDC identified it as the origin of the tainted steroid injections that caused the outbreak.

David Molton, an attorney for the pharmacy’s unsecured creditors, told the district court Friday that the settlement would likely be a key component of the pharmacy’s Chapter 11 plan, which would describe how the pharmacy will pay victims and creditors.

Such plans, filed at the conclusion of a company’s bankruptcy case, frequently provide liability releases to company officials. They are subject to a vote by the pharmacy’s creditors as well as to the approval of the bankruptcy court.

Write to Jacqueline Palank at [email protected]. Follow her on Twitter at @PalankJ.