This has been a summer of reckoning for many companies that aggressively marketed opioids while downplaying their addictive power.
For Mallinckrodt, which filed for bankruptcy last October, the company is one step closer to reorganization, as it revealed it has reached settlements with creditors that would reduce the company’s debt by roughly $1.3 billion, Mallinckrodt said.
Backers of the reorganization now include holders of 84% of the company’s unsecured notes, lenders holding $1.3 billion in outstanding loans and two organized groups of entities with opioid-related claims against the company.
“With this additional support, we are continuing to build consensus for our restructuring plan,” company CEO Mark Trudeau said in a release. “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 October of last year, Mallinckrodt agreed to a $1.6 billion settlement with 47 states and territories to resolve claims over its role in the opioid crisis. It also agreed to pay the U.S. government $260 million to absolve a claim that it underpaid rebates on Acthar Gel, a hormone treatment to relieve inflammation.
A bankruptcy court will hold a confirmation hearing later this month to consider approval of Mallinckrodt’s restructuring. If okayed, the company said it expects the reorganization to take between 90 and 150 days.
Bankruptcy has become a common tactic for companies that profited from the opioid crisis. Earlier this week, a bankruptcy court in New York approved Purdue Pharma’s $4.5 billion settlement, which excuses the company from future opioid litigation. Some states say they will appeal the result.
Another company, Insys Therapeutics, filed for bankruptcy in 2019 and saw its founder, John Kapoor, convicted of a scheme to bribe doctors to prescribe opioids and defraud insurers into paying for them.
In July, Johnson & Johnson and distributors Cardinal Health, AmerisourceBergen and McKesson agreed to a $26 billion settlement to shield them from future litigation in a deal yet to be finalized.