Lenders to Mallinckrodt Plc are mobilizing with legal counsel ahead of a $200 million settlement payment for the drugmaker’s role in the opioid epidemic, according to people familiar with the situation.
(Bloomberg) — Lenders to Mallinckrodt Plc are mobilizing with legal counsel ahead of a $200 million settlement payment for the drugmaker’s role in the opioid epidemic, according to people familiar with the situation.
The payment — due June 16 and earmarked for an opioid trust — is supposed to be Mallinckrodt’s first since exiting bankruptcy a year ago and some lenders want the company to skip the payment in order to safeguard its liquidity, said the people, who asked not to be identified because the matter is private.
Law firm Gibson Dunn & Crutcher held a call earlier this week with a group of first-lien lenders, while Paul Weiss Rifkind Wharton & Garrison hosted a call Wednesday for creditors with holdings in both the company’s first- and second-lien loans, they added. Both firms represented creditor groups during the company’s Chapter 11 process back in 2020.
Meanwhile, the drugmaker is consulting with its long-standing adviser Guggenheim Partners, the people said.
Representatives with the company and Guggenheim declined to comment, while messages left with Gibson Dunn and Paul Weiss were not returned.
An initial $450 million payment was made upon Mallinckrodt’s emergence last year.
The pharmaceutical company in February 2022 won court approval of its bankruptcy exit plan, clearing the path for a settlement of thousands of lawsuits related to its opioid drugs. The plan handed control of the company to creditors and placed opioid litigation claims in a trust set aside for their settlement and payment, Bloomberg reported.
The company listed $680 million in liquidity, including $480 million of cash as of the end of the first quarter, according to a press release.
–With assistance from Jonathan Randles.
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