Mallinckrodt, one of the largest manufacturers of prescription opioids in the U.S., received court approval for a plan that wipes out more than $1 billion of payments meant for addicts while handing control of the pharmaceutical company to its lenders, WSJ Pro Bankruptcy reported. The U.S. Bankruptcy Court for the District of Delaware yesterday approved the plan that would pave the way for the company to exit from bankruptcy, less than a couple of months after it filed for chapter 11 protection. Mallinckrodt executives have said the company reached a restructuring deal after extensive outreach from its creditors, who, the executives said, believed the drugmaker carried too much debt and needed to right-size its finances to stay in business. This is a setback to governments and individual addicts who filed lawsuits seeking compensation from drugmakers for their role in the opioid crisis. The legal fight stretches back nearly a decade, when more than 3,000 lawsuits from states, Native American tribes and counties alleged the drugmakers, pharmacies and distributors played down the risks of the painkillers and didn’t stem their flow. A few opioid manufacturers that lacked the funds to settle those thousands of lawsuits turned to bankruptcy to try to resolve them. Dublin-based Mallinckrodt, for instance, agreed to pay $1.7 billion into a trust for addicts over eight years to resolve thousands of lawsuits over its alleged role in fueling the opioid crisis. As part of that deal, negotiated during Mallinckrodt’s first bankruptcy filed in 2020, addicts permanently surrendered their legal rights to pursue opioid-related litigation against the company, and the drugmaker was allowed to keep manufacturing the drugs. Mallinckrodt this August filed for bankruptcy again to restructure its debts and outstanding obligations, including more than $1 billion still owed to the opioid victims’ trust.
