Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Court OKs Mallinckrodt restructuring, $1 billion cut to opioid settlement

by Uma
0 comment
2023 10 10T204453Z 4 LYNXMPEJ990QQ RTROPTP 4 MALLINCKRODT BANKRUPTCY

Court OKs Mallinckrodt restructuring, $1 billion cut to opioid settlement

By Dietrich Knauth

(Reuters) -Drugmaker Mallinckrodt on Tuesday won court approval for a bankruptcy plan that cuts $1 billion from what it must pay opioid crisis victims, cancels existing equity shares, and trims nearly $2 billion in other debt.

The Ireland-based company reached a relatively swift conclusion to its second Chapter 11, which began on Aug. 28, just 14 months after its previous bankruptcy concluded.

U.S. Bankruptcy Judge John Dorsey approved the restructuring plan at a court hearing in Wilmington, Delaware.

“With substantially less debt and additional financial flexibility, we will be better positioned for the future as we continue delivering therapies that improve outcomes for patients with severe and critical conditions,” Mallinckrodt CEO Siggi Olafsson said in a statement.

Mallinckrodt, which makes branded and generic drugs, first filed for bankruptcy in 2020 to address its high debt load, litigation over its allegedly deceptive marketing of highly addictive generic opioids and disputes over its drug pricing.

Despite the previous bankruptcy settlement that resolved those litigation threats and cut $1.5 billion in debt, Mallinckrodt quickly found itself in financial trouble again due to declining sales for its key branded drugs, including Acthar Gel.

Sales of Acthar, used to treat multiple sclerosis and infantile spasms, were down 20% for the first six months of 2023 after the treatment raked in $516 million in 2022.

As part of its previous bankruptcy, Mallinckrodt, which denied wrongdoing, agreed to pay $1.7 billion to settle about 3,000 lawsuits alleging it used deceptive marketing tactics to boost opioid sales. The new bankruptcy reduces that to $700 million, all of which has already been paid to a settlement trust.

The company’s opioid creditors, including state and local governments, individuals and others who will seek payment from the settlement fund, supported Mallinckrodt’s fast-track second bankruptcy, agreeing to accept a reduced amount as the best deal they could get given its financial woes.

Mallinckrodt’s first bankruptcy also included a $260 million settlement with federal and state government entities that accused the company of overcharging Medicaid health insurance programs for Acthar. Unlike the opioid settlement, Mallinckrodt intends to pay the full amount due under the Acthar settlement after its second bankruptcy.

The bankruptcy plan approved Tuesday will turn over ownership of the company to Mallinckrodt’s lenders. It will emerge from bankruptcy with about $1.75 billion in debt owed to the lenders, which include asset managers like Deerfield Partners and JPMorgan Investment Management, court filings showed.

Dorsey overruled an objection filed by shareholder Alta Fundamental Advisers, which had argued that Mallinckrodt improperly rushed into a second bankruptcy at the expense of equity owners.

Dorsey said Mallinckrodt’s second bankruptcy was “a reasonable exercise” of its business judgment in light of its near-term debt obligations, including $1 billion in opioid settlement payments and $817 million for lenders in 2025.

The reorganized company has a total enterprise value of about $2.95 billion, according to Mallinckrodt’s financial advisor Guggenheim Securities.

(Reporting by Dietrich KnauthEditing by Alexia Garamfalvi, Bill Berkrot and Richard Chang)