Metro

$135m deal proposed in compounding pharmacy bankruptcy case

Federal agents secured the area outside the New England Compounding Center in 2012.

Barry Chin/Globe Staff/File

Federal agents secured the area outside the New England Compounding Center in 2012.

The fund to compensate victims of a deadly 2012 meningitis outbreak linked to tainted drugs at a defunct Framingham pharmacy could increase by more than $35 million, lawyers involved in bankruptcy negotiations said Wednesday.

Under terms of a proposal filed Wednesday in federal bankruptcy court in Boston, at least $135 million will be available for distribution to people who have brought personal injury or death claims against New England Compounding, according to a statement from Paul D. Moore, the trustee of the pharmacy’s Chapter 11 bankruptcy filing, and lawyers advising the victims and their families.

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The agreement is subject to approval by Judge Henry J. Boroff.

Boroff will “first be asked to approve a ‘disclosure statement,’ which describes the terms of the Plan and which will be sent to all qualified creditors along with instructions on how to vote on the Plan,” the statement said. “The hearing to approve the disclosure statement is expected to be held shortly. Judge Boroff will then be asked to confirm the plan at a hearing anticipated to be held in the early spring.”

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The new agreement comes after an earlier settlement was reached in May to provide more than $100 million to victims, with over $47 million coming from the pharmacy’s owners, $29 million from the company’s insurers and landlord, and $20 million coming from the pharmacy’s tax refunds as a result of its losses.

Additional funds in the new proposal will come from entities including companies that provided services to the pharmacy, as well as clinics and health care providers that administered the tainted drugs, the statement said.

“The filing of this Plan marks a crucial step in this tragic saga to provide much needed financial relief to the victims and their families,” said David Molton, a lawyer advising the committee of unsecured creditors, including victims, in the statement.

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Approximately 3,500 parties have filed claims with the bankruptcy court, mostly victims and their family members. At least 64 deaths related to the outbreak have been confirmed.

Though the US Centers for Disease Control and Prevention estimated that about 750 people contracted fungal meningitis or related diseases from the tainted drugs, many additional patients have since reported headaches, fatigue, and other symptoms, and may qualify for compensation, diluting the pool of money available to each person.

The proposed agreement also calls for the establishment of a tort trustee who will distribute funds to the victims and will be responsible for pursuing additional “claims of the NECC estate against responsible third parties who have yet to settle with the NECC estate,” the statement said.

“Once the Plan is confirmed, NECC's creditors finally can receive initial distributions on account of their claims, as well as additional distributions as the Tort Trustee continues to pursue NECC’s remaining claims,” Moore said in the statement.

Todd Wallack of the Globe staff contributed to this report. Travis Andersen can be reached at travis.andersen@globe.com. Follow him on Twitter @TAGlobe.
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