Mallinckrodt has closed in on the reorganization of its company, while reaching for settlements with creditors totaling approximately $1.3 billion, in an effort to reduce their debt. Last October, they had filed for bankruptcy.
This summer has proved fateful for companies marketing and pushing opioids with disregard for their addictive capabilities.
Reorganization backers hold 84% of Mallinckrodt’s unsecured notes while lenders hold outstanding loans of $1.3 billion and two organized groups of entities that have opioid-related claims against the company exist.
CEO Mark Trudeau stated “With this additional support, we are continuing to build consensus for our restructuring plan,” and further added that “The support of these important stakeholder groups reinforces our confidence that this is the best path forward for Mallinckrodt and its creditors, enabling us to preserve value.”
In the last year, in October, the company made a settlement of $1.6 billion with 47 U.S. states and territories, as a result of claims stemming from the opioid crisis. $260 million was also paid to the U.S. government, which was to clear a claim over the underpayment of rebates on Acthar Gel, a hormone based inflammation treatment.
If reorganization is given the green light by a bankruptcy court later this month, the company expects it to take between 90 and 150 days to complete.
This week, a New York bankruptcy court accepted Purdue Pharma’s $4.5 billion settlement that saves the company from future opioid-related litigation as well. The result may be appealed by some states. Bankruptcy is becoming a popular strategy for companies that had profited from opioids.
Insys Therapeutics is a similar company, which has previously filed for bankruptcy in 2019. The company’s founder, John Kapoor, was convicted of bribing doctors in order for them to prescribe opioids and engage in fraudulent activity with insurers.
Johnson & Johnson and distributors Cardinal Health, AmerisourceBergen and McKesson in July, agreed to a $26 billion settlement to prevent litigation in the future, in a deal that has not yet been finalized.
