The judge overseeing the reorganization of opioid maker Mallinckrodt Plc questioned the fairness of a plan to protect company executives and others from future lawsuits, Bloomberg News reported. Under the company’s $5.45 billion bankruptcy exit plan, company officers and directors could not, in most cases, be sued for their alleged role in America’s opioid epidemic. During a virtual court hearing yesterday on the proposal, U.S. Bankruptcy Judge John Dorsey asked how the legal protections would affect creditors who may want to keep suing Mallinckrodt. The company has argued that the provisions should be approved because the reorganization plan would fall apart without the protections, known as third-party releases. A federal judge in New York rejected similar provisions in Purdue Pharma’s reorganization, a legal finding that, if not overturned on appeal, would blow up the drug maker’s plan to end its multi-billion dollar bankruptcy. “It’s not just an issue of necessity, it’s a question of fairness,” Judge Dorsey said in the Mallinckrodt case. “How is it fair to them? What does it give to them?” The company and critics spent three days in a virtual courtroom this week arguing about whether Dorsey should approve the reorganization plan. The judge, based in Wilmington, Delaware, said he would rule as soon as possible. Most creditors have backed the company’s reorganization plan, including the legal releases. A handful have attacked Mallinckrodt’s proposal, in part because it would strip creditors of the right to sue certain people and entities that are not in bankruptcy, but had a role in Mallinckrodt’s operations. Like Purdue, Mallinckrodt has proposed a trust fund to compensate public agencies and others who claim they were harmed by the addictive painkillers that flooded America and caused a spike in overdose deaths. Mallinckrodt disputes those accusations, but filed bankruptcy in part to find a way to resolve the claims, company attorney Christopher Harris said in court on Thursday.
