By Dietrich Knauth and Jonathan Stempel
NEW YORK (Reuters) -A mediator in Purdue Pharma's bankruptcy case on Wednesday indicated an agreement was being drafted between the company's owners and U.S. states pressing for more money to resolve allegations that the OxyContin maker fueled the opioid epidemic.
Members of the wealthy Sackler family, who own Purdue Pharma, have been trying to reach an agreement with eight states and the District of Columbia, after they had blocked a previous settlement that included a $4.3 billion cash payment.
The Sacklers had proposed a settlement worth up to $6 billion in mediation, and most of the states had agreed to settle on those terms, according to a report filed in February by mediator Shelley Chapman.
Chapman reported on Wednesday that she was unilaterally extending talks, which U.S. Bankruptcy Judge Robert Drain had allowed if she is actively involved in drafting terms.
While neither Purdue nor the mediator offered any details during a Wednesday court hearing, Drain said he believed the mediation was proceeding as hoped after "reading between the lines" of the latest report.
To allow the mediation to progress, Drain extended a litigation shield that protects the Sacklers from being sued for their alleged role in the opioid crisis until March 23. The shield would have expired on March 3 if it was not extended.
In her report, Chapman said she will file another mediation update "at the appropriate time" and did not request an extension with an end-date, as she has in previous reports.
While the mediation continues, Purdue is also trying to revive its prior bankruptcy plan that was based on the $4.3 billion settlement.
The company is appealing a December ruling by a U.S. District judge that blocked the plan, and the U.S. Court of Appeals for the 2nd Circuit in New York has said it will hold oral arguments during the last week in April.
Purdue filed for Chapter 11 protection in September 2019 after being hit with thousands of lawsuits claiming that the company and members of the Sackler family used deceptive marketing to fuel a nationwide opioid epidemic.
The company pleaded guilty to misbranding and fraud charges related to its marketing of OxyContin in 2007 and 2020. Members of the Sackler family have denied wrongdoing.