Phoenix Bankruptcy Law News

Pharmacy Blamed for Meningitis Outbreak Files for Bankruptcy

So far, 39 people have died after they were allegedly treated with meningitis-contaminated steroid injections. Hundreds of others have been infected.

New England Compounding Center, the company accused of producing the contaminated injections, faces more than 400 lawsuits. Now the company is facing bankruptcy as well.

NECC has filed for Chapter 11 bankruptcy, claiming to have somewhere between $1 million and $10 million in assets, NBC News reports.

The center is accused of shipping out three lots of contaminated steroid injections. About 14,000 people in 23 states were treated with the injections. Fortunately, the injections didn't make their way to Arizona.

Recent investigations have shown that the firm was operating on a larger scale than allowed under law and had evaded sancations from the Food and Drug Administration and state regulators over previous cases of contamination, NBC News reports.

According to the bankruptcy filing, NECC is currently in about $2.34 million of debt. However, its liability could be multiple times that as a result of the lawsuits.

The lawsuits, however, will be put on hold for the moment. After filing for bankruptcy, debtors are granted an "automatic stay," temporarily suspending any lawsuits or attempts at debt collection.

The injury claims will now be addressed in the bankruptcy court. The lawsuits will be grouped together and settled in the bankruptcy suit in a way that's fair to all of the alleged victims.

While the victims are glad that the company will probably be out of commission, they've also expressed concern about whether the bankrupt company will be able to pay up. "While NECC clearly should declare bankruptcy and never be permitted to reopen its doors, we have significant questions as to why this is a Chapter 11 bankruptcy, what funds are available for NECC's victims and how the victims' claims will be evaluated," lawyer Elizabeth A. Kaveny told NBC.

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