Mallinckrodt Shareholders Doubt Company Will Pay $200M Opioid Settlement
An SEC filing shows the company may fail to make its payment scheduled for this week.
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By - United Kingdom-based Mallinckrodt is considering repeat bankruptcy as its $200 million opioid payment comes due. A Security and Exchange Commission (SEC) filing from June 5 showed that company shareholders are mulling another bankruptcy filing and other options to comply with payment obligations of its $1.7 billion opioid lawsuit.
The second bankruptcy would put the fate of the entire opioid settlement at risk, with most of the company’s assets going to creditors and investors before reaching victims.
“On June 2, 2023, the Board directed management, and the Company’s advisors continue analyzing various proposals and engaging in discussions with various parties related to these options and viewpoints,” wrote Mark Tyndall, EVP and Chief Legal Officer & Corporate Secretary of Mallinckrodt. “There can be no assurance of the outcome of this process, including whether or not the Company may make a filing in the near term or later under the US Bankruptcy Code or analogous foreign bankruptcy or insolvency laws.”
The company was the primary generic opioid manufacturer for the United States, producing 28.8 billion pills and supplying 38% of the market between 2006 and 2012.
Originally, Mallinckrodt was found to have irresponsibly marketed its opioid pills, ignoring risks and utilizing third-party groups to aggressively promote its products.
In 2017, the company was also targeted by the US Drug enforcement agency for its dealings with distributors that arranged sales to pill mills that recklessly flooded US communities with controlled substances.
After filing for bankruptcy in October 2020, the company subsequently reorganized and set forward on paying its opioid settlement. However, the most recent communications from Mallinckrodt to the SEC suggest that the company will never fully pay its $1.725 billion settlement and that those harmed by their business practices may see little to no reimbursement.
Dozens of companies have already agreed to nearly $50 billion in opioid settlements to deal with the consequences of the addiction crises that emerged in the early 2000s. Recently, Purdue Pharma was approved for a bankruptcy deal worth $6 billion that will bar its owners from further civil action. Teva also agreed to a $4.25 billion settlement in 2021, including $1.2 billion to pay for Narcan, an overdose reversal medication.
Overdose deaths have grown at a rapid pace in the US, reaching 107,000 in 2021. Since 2004, these deaths have become increasingly linked to the use of heroin and synthetic opioids like oxycodone and fentanyl. The rate of deaths attributed to prescription opioids has declined since its height in 2020, but it remains a significant contributor to overdose deaths.
