It has been a tough summer for many companies that have aggressively marketed opioids while downplaying their addictiveness.
For Mallinckrodt, who filed for bankruptcy last October, the company is taking another step towards reorganization, as it revealed it has made deals with creditors that would reduce the company’s debt by around 1.3. billion dollars, Mallinckrodt said.
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Supporters of the reorganization now include holders of 84% of the company’s unsecured notes, lenders with $ 1.3 billion in outstanding loans and two organized groups of entities with opioid-related claims against the company.
“With this additional support, we continue to build consensus on our restructuring plan,” company CEO Mark Trudeau said in a statement. “The support of these important stakeholder groups reinforces our confidence that this is the best way forward for Mallinckrodt and its creditors, allowing us to preserve value.
In October last year, Mallinckrodt agreed to a $ 1.6 billion settlement with 47 states and territories to resolve claims over his role in the opioid crisis. He also agreed to pay the US government $ 260 million to absolve a claim he underpaid discounts on Acthar Gel, a hormone treatment to relieve inflammation.
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A bankruptcy court will hold a confirmation hearing later this month to consider approval of the restructuring of Mallinckrodt. If approved, the company said it expects the reorganization to take between 90 and 150 days.
Bankruptcy has become a common tactic for companies that have profited from the opioid crisis. Earlier this week, a New York bankruptcy court approved Purdue Pharma’s $ 4.5 billion settlement, which exempts the company from any 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 into prescribing opioids and swindle insurers to pay them.
In July, Johnson & Johnson and distributors Cardinal Health, AmerisourceBergen and McKesson agreed to a $ 26 billion settlement to protect them from future litigation in a deal that has yet to be finalized.