Mallinckrodt PLC announced its intention to initiate chapter 11 bankruptcy protection once again, marking its second filing in three years. The Dublin-based pharmaceutical company initially filed for chapter 11 in 2020, emerging from the process last year, as it grappled with a billion-dollar settlement related to its involvement in the opioid crisis. Mallinckrodt holds a significant position as one of the major opioid manufacturers in the U.S.
In the preceding year, the company reached a $1.7 billion settlement to address a multitude of lawsuits connected to opioid addiction. Discussions with hedge funds have been ongoing, aiming to reduce the settlement by $1 billion in exchange for gaining control of the company, according to the Wall Street Journal.
Mallinckrodt recently revealed a restructuring support agreement with the majority of its primary and secondary lien debtholders, alongside the Opioid Master Disbursement Trust II. This agreement outlines a restructuring plan that is set to reduce the company’s debt by approximately $1.9 billion.
The terms of the agreement encompass a final payment of $250 million to the trust, supplementing the already disbursed $450 million. This additional amount is designated to support initiatives addressing the opioid crisis and funding addiction-recovery programs. This arrangement, however, leaves $1 billion of the settlement unpaid.
The company is set to file for a prepackaged chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware within the upcoming days. The company anticipates the completion of the prepackaged Chapter 11 process in the fourth quarter of 2023, citing robust backing from key stakeholders.
Throughout this process, Mallinckrodt affirms its commitment to delivering therapeutic treatments to patients and honoring staff and vendor obligations. Upon consummation of the plan, all of the company’s outstanding ordinary shares are expected to be eliminated.
In addition to its involvement in the opioid sector, Mallinckrodt offers nonopioid products such as Acthar gel, utilized in treating rheumatoid arthritis, and Inomax nitric oxide gas, employed in addressing respiratory failure in newborns.
The second quarter of the fiscal year saw the company incur a loss of $747.8 million, contrasting with a loss of $193.5 million reported in the corresponding period of the prior year. Despite this, sales exhibited a 1.3% increase, amounting to $475 million.
Mallinckrodt’s stock has experienced a decline of 23%, trading at 45 cents as of Wednesday, and has witnessed a substantial year-to-date drop of 94%. Meanwhile, the S&P 500 index has demonstrated a growth of 16% during the same period.
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