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Mallinckrodt PLC said Wednesday it will file for chapter 11 bankruptcy protection in the coming days — its second such filing in three years — after reaching a deal with most of its lenders.
The Dublin-based drugmaker filed for chapter 11 in 2020, a process it only emerged from last year, as it struggled with a billion-dollar settlement for its role in the opioid crisis. Mallinckrodt is one of the biggest manufacturers of opioids in the U.S.
Last year, the company struck a $1.7 billion settlement to resolve the thousands of lawsuits related to opioid addition. The company has been in talks with hedge funds in an effort to reduce that settlement by $1 billion in return for control of the company, as the Wall Street Journal has reported.
On Wednesday, the company said it has entered a restructuring support agreement with most of its first- and second-lien debtholders and the Opioid Master Disbursement Trust II on the terms of a restructuring that will see it reduce its debt by about $1.9 billion.
The agreement includes a final payment of $250 million to the trust, on top of the $450 million already paid, to support its work on the opioid crisis and to fund addiction-recovery programs. That leaves $1 billion of the settlement unpaid.
The company will file for a prepackaged chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware in the coming days.
“Due to the overwhelming support of its key stakeholders, the company expects to complete the contemplated prepackaged Chapter 11 process in the fourth quarter of 2023,” the company said in a statement.
It will continue to deliver therapies to patients and pay staff and vendors. All of the company’s outstanding ordinary shares are expected to be extinguished once the plan is consummated.
Mallinckrodt’s nonopioid products include Acthar gel, a treatment for rheumatoid arthritis, and Inomax nitric oxide gas, which is used to treat respiratory failure in newborns.
In the second quarter, the company had a loss of $747.8 million, compared with a loss of $193.5 million posted in the year-earlier period. Sales rose 1.3% to $475 million.
The stock
MNK,
is down 23% at 45 cents Wednesday and has fallen 94% in the year to date, while the S&P 500
SPX
has gained 16%.
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