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Mallinckrodt Plc (NYSE:MNK), a venerable pharmaceutical company with a history spanning almost 150 years, is poised to file for bankruptcy for the second time in less than three years.
This decision comes as the company grapples with the ramifications of business declines and the challenge of meeting payments tied to billions in dollars of settlement to address a barrage of lawsuits alleging its role in fueling the U.S. opioid epidemic.
In a filing, Mallinckrodt unveiled its intent to seek Chapter 11 protection in Delaware in the immediate future. The company also disclosed that it has reached a preliminary restructuring agreement with its creditors, outlining the contours of its approach to navigate the challenging landscape.
Related: Mallinckrodt's Potential Bankruptcy: Hedge Funds' New Path to Dodge Opioid Settlement Debt?
The company reached a restructuring deal with the support of most of Mallinckrodt's creditors. The agreement provides a final payment of $250 million to an opioid-victims compensation trust. Mallinckrodt said it has already paid $450 million to the trust established to fund addiction treatment and address the U.S. opioid crisis.
Mallinckrodt said The creditor agreement would also reduce the company's total funded debt by about $1.9 billion.
The company expects to complete the Chapter 11 process in the fourth quarter of this year and is still operating normally.
This isn't Mallinckrodt's first encounter with bankruptcy proceedings. The company filed for Chapter 11 in October 2020, grappling with the legal complexities arising from its perceived roles in the opioid crisis.
Price Action: MNK shares are down 16.70% at $0.49 during the premarket session on the last check Wednesday.
Posted In: MNK
