Pharmaceutical company Mallinckrodt, along with several subsidiaries, has initiated voluntary prepackaged Chapter 11 bankruptcy proceedings in the US Bankruptcy Court for the District of Delaware. This marks Mallinckrodt’s second bankruptcy filing in a span of three years.
The filing is part of a restructuring plan aimed at reducing the company’s debt by $1.9 billion and transferring ownership to its lenders. This move comes as Mallinckrodt seeks to address its financial challenges, including debt, litigation related to opioid marketing, and drug pricing disputes.
The bankruptcy proceeding aims to reduce Mallinckrodt’s obligations to victims of the US opioid crisis by $1 billion. The company’s previous restructuring plan, initiated in 2020, involved a $1.7 billion settlement to resolve approximately 3,000 lawsuits that alleged deceptive marketing practices to boost opioid sales.
However, Mallinckrodt’s financial difficulties persisted due to declining sales of key branded drugs, leading to missed payments and negotiations around a second bankruptcy filing.
Mallinckrodt anticipates emerging from this bankruptcy in the fourth quarter of 2023 with the support of its key stakeholders. The company’s restructuring plan, if approved by the court, would significantly reduce its debt obligations and provide it with over $450 million in available liquidity. This plan aims to position Mallinckrodt for a stronger financial foundation, better equipped to address patient needs in severe and critical conditions.
Siggi Olafsson, President and CEO of Mallinckrodt, emphasized the company’s commitment to improving patient outcomes and expressed gratitude to stakeholders for their support throughout the restructuring process. The bankruptcy filing reflects Mallinckrodt’s efforts to address financial challenges and create a more stable foundation for its future operations.
