Mallinckrodt, with turnkey settlement, rushes to push through new reorganization plan
- Drugmaker to file amended restructuring plan in coming days
- Recent deal captures support from key creditor and opioid claimant
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(Reuters) – Mallinckrodt Plc rushes to formalize its recent settlement with key groups of creditors and opioid claimants in the coming days as it aims to come out of bankruptcy by year-end an attorney for the drugmaker said in a virtual Delaware Bankruptcy Court hearing on Wednesday.
Latham & Watkins’ Anupama Yerramalli told a virtual hearing his team aimed to file an amended reorganization plan by the end of the week as well as a revised draft schedule for a bankruptcy court hearing to approve the plan.
“There is a lot of work the parties are going to have to do over the next few days,” said Yerramalli.
Mallinckrodt filed for bankruptcy in Delaware in October 2020 with $ 5.3 billion in funded debt to resolve widespread litigation brought by states, local governments and individuals accusing him of deceptively marketing opioids. The company is currently pursuing a reorganization plan that would reduce its overall debt by $ 1.3 billion and create an opioid claimant trust worth approximately $ 1.7 billion.
The proposal met with opposition from several groups, including the company’s official unsecured creditors committee, its official committee of opioid-related claimants and second-tier note holders, until the announcement was made. an agreement on September 3. regulation sets up a trust funded with $ 135 million in cash for holders of general unsecured receivables, which include AmerisourceBergen Corp and CVS Pharmacy Inc, and would be entitled to additional payments under certain conditions.
The deal also adds $ 125 million to a separate trust for opioid claimants who will be paid eight years after the plan goes into effect. This amount will be in addition to the $ 1.6 billion that the trust was already expected to receive.
The company also resolved, as part of the settlement, a dispute with holders of senior notes who claimed to be entitled to certain premiums for early repayments of their debt.
A hearing on the plan is currently set for September 21 before U.S. bankruptcy judge John Dorsey in Wilmington, Delaware.
Despite peace with most of his major creditors groups, Mallinckrodt still faces some opposition to the plan. The United States Securities and Exchange Commission has challenged the format of its proposal to publish third-party claims, which was the subject of heated debate recently during the bankruptcy of Purdue Pharma LP. Additionally, Mallinckrodt faces ongoing disputes with plaintiffs pursuing antitrust claims related to the company’s Acthar freeze product outside of bankruptcy court. A group of plaintiffs have asked Dorsey for permission to resume parts of this litigation.
The company’s next hearing before Dorsey is set for September 14.
The case is In re Mallinckrodt Plc, United States Bankruptcy Court, District of Delaware, No. 20-12522.
For Mallinckrodt: George Davis, George Klidonas, Andrew Sorkin, Anupama Yerramalli, Jeff Bjork, Elizabeth Marks of Latham & Watkins; and Mark Collins, Robert Stearn Jr, Michael Merchant, Amanda Steele, Robert Maddox of Richards, Layton & Finger
For the Unsecured Creditors Committee: Cullen Drescher Speckhart and Cathy Hershcopf de Cooley; and Natalie Ramsey of Robinson & Cole
For the Opioid Applicants Committee: Arik Preis, Mitchell Hurley and Sara Brauner of Akin Gump Strauss Hauer & Feld; and Justin Alberto and Seth Van Aalten by Cole Schotz
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