The U.S. Bankruptcy Court for the District of Delaware confirmed Mallinckrodt’s plan of reorganization, paving the way for the company to begin the next stage in its reorganization process.
“We are pleased to have achieved this significant milestone in the company’s reorganization,” Mark Trudeau, president and CEO of Mallinckrodt, said. “We appreciate the broad consensus reached with key stakeholder groups for the plan and their confidence in Mallinckrodt and our path forward. We have made important progress and are now turning to the final phases in a reorganization process designed to reduce debt, address litigation claims and position the company for long-term success.”
“I would like to extend my sincere gratitude to the Mallinckrodt team for their unwavering patience, focus and resilience throughout this process. We also appreciate the strong support of our customers, partners and other stakeholders,” Trudeau said. “All of us at Mallinckrodt remain as committed as ever to developing new therapies, improving patient health outcomes and supporting underserved patients with severe and critical conditions.”
Implementing the plan and previously announced restructuring support agreement (RSA) will significantly improve Mallinckrodt’s financial position and resolve numerous lawsuits the company was facing prior to the Chapter 11 proceedings by channeling opioid claims and many other general unsecured claims to various creditor trusts. Implementing the plan and RSA will also enable Mallinckrodt to move forward as a better capitalized company, with material historical litigation resolved and a renewed focus on its strategic priorities of developing and commercializing therapies that improve health outcomes.
The plan, as contemplated by the RSA, includes key legal settlements that resolve opioid claims brought against the company and litigation matters involving Acthar Gel, among other claims, and provides for the partial equitization of the company’s guaranteed unsecured notes. The plan strengthens the company’s balance sheet and reduces its total debt by approximately $1.3 billion.
The plan was broadly supported by key financial, legal and other stakeholders.
In the coming days, the directors of Mallinckrodt intend to make certain filings to commence examinership proceedings in Ireland, which are required to implement certain Irish law aspects of the reorganization and allow for emergence. The company expects the Irish examinership proceedings to take approximately 100 days. Mallinckrodt expects to formally emerge from Chapter 11 in the first half of 2022, following the completion of the examinership proceedings and once all conditions of the plan are effective. Until that time, the company remains under the U.S. Bankruptcy Court’s jurisdiction.
Latham & Watkins, Wachtell, Lipton, Rosen & Katz, Arnold & Porter, Ropes & Gray and Hogan Lovells are serving as counsel. Guggenheim Securities is serving as investment banker and AlixPartners is serving as restructuring advisor to Mallinckrodt.