Drugmaker Mallinckrodt to File Second Bankruptcy in Three Years

Mallinckrodt Plc plans to file bankruptcy for the second time in less than three years after battling business declines and struggling to keep up with payments on a $1.7 billion settlement resolving a wave of lawsuits accusing the drugmaker of fueling the US opioid epidemic.

(Bloomberg) — Mallinckrodt Plc plans to file bankruptcy for the second time in less than three years after battling business declines and struggling to keep up with payments on a $1.7 billion settlement resolving a wave of lawsuits accusing the drugmaker of fueling the US opioid epidemic.

The 156-year-old company plans to file for Chapter 11 protection in Delaware in the coming days, it said in a filing. Mallinckrodt has struck a tentative restructuring deal with creditors, according to the filing.

Mallinckrodt previously filed bankruptcy in October 2020, joining other opioid manufacturers including OxyContin maker Purdue Pharma LP and Insys Therapeutics Inc. that turned to Chapter 11 to resolve costly litigation about their roles in the drug crisis.

Mallinckrodt won wide support for the opioid settlement intended to compensate hospitals, states, tribes and individuals hurt by its products. The company made an initial $450 million payment in June 2022, when it left its first bankruptcy, but its business has sputtered as sales of its blockbuster drug, Acthar Gel, disappoint.

At the request of its lenders, Mallinckrodt began weighing its options ahead of a $200 million opioid settlement payment due June 16, concerned the payment could stress its finances.

The company has said it understands the settlement is important in helping combat the nation’s opioid crisis and fund addiction treatment services amid criticism from individual victims.

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