Item 1.03. Bankruptcy or receivership.
As stated earlier, on
and its affiliates debtors under Chapter 11 of the Bankruptcy Code. Also, as mentioned earlier, on
As stated earlier, on
Summary of the Scheme of Arrangement
The following is a summary of the material features of the Plan as confirmed by the
The Scheme implements certain aspects of the Plan insofar as it relates solely to Mallinckrodt and provides for the following (among other things):
• Resolution of Opioid-Related Claims Against Mallinckrodt. Pursuant to the Scheme, on the effective date thereof (the "Effective Date") all opioid claims against Mallinckrodt are deemed to have been settled, discharged, waived, released and extinguished in full against Mallinckrodt, and Mallinckrodt ceases to have any liability or obligation with respect to such claims, which are then treated in accordance with the Plan as follows: • Opioid claims will be channeled to one or more trusts, which will receive
$1,725.0 millionin structured payments consisting of (i) a $450.0 millionpayment upon effectiveness of the Plan; (ii) a $200.0 millionpayment upon each of the first and second anniversaries thereof; (iii) a $150.0 millionpayment upon each of the third through seventh anniversaries thereof; and (iv) a $125.0 millionpayment upon the eighth anniversary thereof, with an eighteen-month prepayment option at a discount for all but the first payment. • Opioid claimants will also receive, in addition to other potential consideration, warrants for approximately 19.99% of reorganized Mallinckrodt's new outstanding shares, after giving effect to the exercise of the warrants, but subject to dilution from equity reserved under Mallinckrodt's management incentive plan, exercisable at any time on or prior to the sixth anniversary of the effectiveness of the Plan, at a strike price reflecting an aggregate equity value for the reorganized Debtors of $1,551.0 million. 1
• Following effectiveness of the Plan, certain Mallinckrodt subsidiaries will remain subject to an agreed-upon operating injunction with respect to the operation of their opioid business. • Resolution of Disputes with the
U.S. Department of Justiceand OtherGovernmental Parties Relating to Acthar Gel. Pursuant to the Scheme, on the Effective Date all claims of U.S. Department of Justiceand other governmental parties relating to Acthar Gel against Mallinckrodt are deemed to have been settled, discharged, waived, released and extinguished in full against Mallinckrodt, and Mallinckrodt ceases to have any liability or obligation with respect to such claims, which are then treated in accordance with the Plan and the terms of the settlement that is summarized below: • Mallinckrodt has reached an agreement with the U.S. Department of Justice("DOJ") and other governmental parties to settle a range of litigation matters and disputes relating to Acthar Gel (the "Governmental Acthar Settlement") including a Medicaid lawsuit with the Centers for Medicare and Medicaid Services, a related False Claims Act ("FCA") lawsuit in Boston, and an Eastern Districtof Pennsylvania("EDPA") FCAlawsuit principally relating to interactions of Acthar Gel's previous owner ( Questcor Pharmaceuticals Inc.) with an independent charitable foundation. Under the Governmental Acthar Settlement, which was conditioned upon Mallinckrodt commencing its chapter 11 proceeding and provides the distributions the applicable claimants will receive under the Plan, Mallinckrodt has agreed to pay $260.0 millionto the DOJ and other parties over seven years and reset Acthar Gel's Medicaid rebate calculation as of July 1, 2020, such that state Medicaid programs will receive 100% rebates on Acthar Gel Medicaid sales, based on current Acthar Gel pricing. Also in connection with the Governmental Acthar Settlement, Mallinckrodt entered into a five-year corporate integrity agreement with the Office of Inspector General of the U.S. Department of Healthand Human Services in March 2022. As a result of these agreements, upon effectiveness of the Governmental Acthar Settlement in connection with the effectiveness of the Plan, the U.S. Governmentwill drop its demand for approximately $640 millionin retrospective Medicaid rebates for Acthar Gel and agree to dismiss the FCAlawsuit in Bostonand the EDPA FCA lawsuit. Similarly, state and territory Attorneys General will also drop related lawsuits. In turn, Mallinckrodt will dismiss its appeal of the U.S. District Court for the District of Columbia'sadverse decision in the Medicaid lawsuit, which was filed in the U.S. Court of Appeals for the District of Columbia Circuit. • Mallinckrodt has entered into the Governmental Acthar Settlement with the DOJ and other governmental parties solely to move past these litigation matters and disputes and does not make any admission of liability or wrongdoing. • Modification of Mallinckrodt's Senior Secured Term Loans. Upon effectiveness of the Scheme and the Plan, lenders holding allowed claims in respect of Mallinckrodt's senior secured term loans due September 2024(the "2024 Term Loans") and its senior secured term loans due February 2025(the "2025 Term Loans") will receive either (1) their pro rata share of new senior secured term loans in an amount equal to the then-remaining principal amount of such claims bearing interest at a rate per annum equal to LIBOR plus 5.25% (with respect to the 2024 Term Loan) or LIBOR plus 5.50% (with respect to the 2025 Term Loan), maturing on the earlier of September 30, 2027and 5.75 years after effectiveness of the Scheme and the Plan and without any financial maintenance covenant, and payment in cash of an exit fee equal to 1.00% of such remaining principal amount or (2) payment in full of such remaining principal amount in cash and payment in cash of an exit fee equal to 0.50% of such remaining principal amount. • Repayment of the Mallinckrodt's Senior Secured Revolving Credit Facility. Upon effectiveness of the Scheme and the Plan, all allowed claims under Mallinckrodt's senior secured revolving credit facility will be paid in full in cash, principally with the proceeds of newly incurred debt. • Reinstatement of Mallinckrodt's 10.00% First Lien Senior Secured Notes Due 2025. Upon effectiveness of the Scheme and the Plan, Mallinckrodt's first lien senior secured notes due 2025 will be reinstated at existing rates and maturities as the applicable holders' purported make-whole claims were disallowed. • Modification of Mallinckrodt's 10.00% Second Lien Senior Secured Notes Due 2025. Upon effectiveness of the Scheme and the Plan, lenders holding allowed claims in respect of Mallinckrodt's 10.00% second lien senior secured notes due 2025 will receive their pro rata share of new 10.00% second lien senior secured notes due 2025 that will have the same principal amount and other economic terms as the existing second lien senior secured notes. 2
• Restructuring of Mallinckrodt's Guaranteed Unsecured Notes. Upon effectiveness of the Scheme and the Plan, holders of allowed claims in respect of Mallinckrodt's 5.75% senior notes due 2022, 5.625% senior notes due 2023 and 5.50% senior notes due 2025 (the "Guaranteed Unsecured Notes") will receive their pro rata share of
$375.0 millionof new 10.00% second lien senior secured notes due seven years after effectiveness of the Scheme and the Plan and 100% of the new Mallinckrodt ordinary shares, subject to dilution by the warrants described above and Mallinckrodt's management incentive plan. • Resolution of Other Remaining Claims. Pursuant to the Scheme, on the Effective Date, trade claims and other general unsecured claims, including the claims of the holders of the 4.75% senior notes due April 2023, against Mallinckrodt are deemed to have been settled, discharged, waived, released and extinguished in full, and Mallinckrodt ceases to have any liability or obligation with respect to such claims, which are then treated in accordance with the Plan, which provides for the holders of such claims to share in $135.0 millionin cash, plus other potential consideration, in accordance with the allocations as prescribed in the Plan. • Cancellation of the Existing Shares. Pursuant to the Scheme, on the Effective Date the members of Mallinckrodt receive no distribution and all of the existing ordinary shares of Mallinckrodt and all rights attaching or relating thereto will be cancelled.
Notwithstanding the placing of the Order, the execution of the Plan remains subject to the satisfaction or waiver of various conditions precedent set out therein.
The above summary of plan and plan is not complete and is qualified in its entirety by reference to the plan and plan, which are filed as Exhibits 2.1 and 2.2 to this current Report on Form 8-K and incorporated in this point 1.03 by reference.
Certain Information Regarding the Assets and Liabilities of Mallinckrodt
Information regarding Mallinckrodt’s assets and liabilities as of the latest possible date prior to the entry of the order is hereby incorporated by reference into Mallinckrodt’s Annual Report on Form 10-K for the period ended.
Section 9.01. Financial statements and supporting documents.
(d) Exhibits. 4
Exhibit No. Description of Exhibit 2.1 Fourth Amended Joint Plan of Reorganization (with Technical Modifications) of
Mallinckrodt Plcand Its Debtor Affiliates Under Chapter 11 of the Bankruptcy Code (included as Schedule 2 to the Order of the High Court of Ireland, dated as of April 27, 2022). 2.2 Amended Proposals for a Scheme of Arrangement Between Mallinckrodt Public Limited Companyand Its Members and Creditors (included as Schedule 1 to the Order of the High Court of Ireland, dated as of April 27, 2022). 99.1 Order of the High Court of Ireland, dated as of April 27, 2022. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). 5
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