Mallinckrodt PLC is preparing to file for bankruptcy within weeks, setting up a potential battle with state and local governments over the drugmaker’s alleged role in fueling opioid addiction in the U.S., WSJ Pro Bankruptcy reported. The Ireland-based company is negotiating with key creditors over a restructuring proposal covering more than $5 billion in debt. The framework for restructuring that debt isn’t supported by the states and U.S. territories that have sued Mallinckrodt and other pharmaceutical companies over the opioid crisis. Most state attorneys general reached a settlement with Mallinckrodt in February for $1.6 billion in payments over eight years, plus a minority stake in the business. But in March, Mallinckrodt’s capacity to fulfill its end of the settlement was damaged after the company suffered an adverse court ruling: A federal judge ordered it to pay $640 million for retroactive rebates related to its multiple-sclerosis treatment Acthar. Mallinckrodt has appealed the ruling, but the bill is close to coming due, prompting the drugmaker to pursue a chapter 11 bankruptcy filing that would give it financial breathing room.
