Drugmaker Mallinckrodt's opioid creditors will support an expedited second bankruptcy, despite a "gruesome" $1 billion reduction in settlement money for victims of the U.S. opioid crisis, attorneys said yesterday, Reuters reported. Mallinckrodt, which makes both branded and generic drugs, filed for its second bankruptcy on Monday after previously emerging from chapter 11 in June 2022. The company blamed higher interest rates on its debt, upcoming opioid settlement payments, and reduced sales for blockbuster drugs like its Acthar gel treatment for multiple sclerosis and infantile spasms. Mallinckrodt's second restructuring, which would wipe out existing equity shares, will reduce the company's debt by $1.9 billion. It will also trim $1 billion from its previously agreed opioid settlement, which resolved about 3,000 lawsuits alleging that the company used deceptive marketing tactics to boost generic opioid sales. The restructuring agreement has the support of over 90% of its lenders and the trustees in charge of the opioid settlement funds, attorneys said at a hearing yesterday in the U.S. Bankruptcy Court for the District of Delaware. David Molton, an attorney for the opioid trust, said that losing $1 billion in settlement money was a "particularly gruesome" result for states, local governments, individual victims and others who would have benefited from the settlement money. Those creditors will receive just $700 million after Mallinckrodt agreed to an up-front of $250 million payment just before its second bankruptcy. Molton told U.S. Bankruptcy Judge John Dorsey that none of the opioid victims were happy with the deal.
