New England Compounding Center, the Framingham speciality pharamcy linked to the deadly, national meningitis outbreak, said today it has filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
The filing seeks to establish a fund to compensate individuals and families affected by a nationwide meningitis outbreak.
In papers filed with the U.S. Bankruptcy Court of Massachusetts, the Waverly Street company said its goal is to provide a greater, quicker, fairer payout to its creditors than they could achieve through piecemeal litigation.
The company also announced the appointment of Keith D. Lowey as and independent director of NECC and as the company's chief restrucsturing officer. Lowey will be responsible for NECC's effort to establish the compensation fund and commence payments to affected parties.
"This will be a cooperative effort," said Lowey, who is a principal in the financial consulting firm Verdolino & Lowey. "We want to assemble a substantial fund, and then distribute it fairly and efficiently to those who are entitled to relief."
Lowey said NECC seeks to forge a consensual, comprehensive resolution of claims which will be funded by agreements reached among the claimants, the Company, its insurers and other parties with potential liability for the meningitis cases. All such claims will be addressed in U.S. Bankruptcy court.
Lowey will be in charge of NECC's conduct of the Chapter 11 case and its effort to work cooperatively with those impacted by the meningitis outbreak.
"We want to confirm the Chapter 11 plan establishing the Compensation Fund as soon as possible," Lowey said.
To accomplish this goal, NECC's bankruptcy counsel, Daniel Cohn of Murtha Cullina LLP, emphasized that claimants and their lawyers will be actively involved.
"We expect that a committee of meningitis claimants will be appointed to represent the entire group," said Cohn. "That will help assure that an appropriate amount will be collected and contributed to the Compensation Fund, and that the money will be distributed fairly."
"Many families across the U.S. have been impacted by this great tragedy, and it is difficult to comprehend the sense of loss so many people have experienced. Everyone associated with New England Compounding Center shares that sense of loss," Lowey said in a written statement. "We recognize the need to compensate those affected by the meningitis outbreak fairly and appropriately. We hope that by establishing this Fund under Chapter 11 of the U.S. Bankruptcy Code, those families impacted by this tragedy may be compensated as quickly as is possible."
Since it was first identified that patients who received a steroid injection linked to New England Compounding Center in Framingham were contracting fungal meninitis, 39 people have died and more than 620 have been infected. (None of the cases are in Massachusetts, but an Andover woman may be the first case related to the deadly fungal outbreak.)
Just before Thanksgiving, U.S. District Judge Dennis Saylor has ordered an expedited hearing to determine whether to freeze at least $461 million in assets belonging to New England Compounding Center, its owners and two related companies, as more than 40 lawsuits have been filed in numerous states.
New England Compounding Center (NECC) recalled more than 17,000 steroids in September indicating they may contain a fungus. Later, NECC recalled every product made and laid off all employees.
The FDA released a list of customers, who received products from NECC in Framingham on or after May 21.