Mallinckrodt Bankruptcy Would Hand Control Over to Bondholders

(Bloomberg) - Mallinckrodt Plc, maker of opioids and other drugs, is about to close a controlling stake in its unsecured bondholders in a bankruptcy filing, according to people aware of the plan.
The bonds would trade for most of Mallinckrodt's equity and some new debt, and senior lenders' debts would be resumed or replaced with new securities that fully cover their claims, People said. They asked not to be named and to discuss private negotiations.
The lenders and opioid applicants would be included in the agreement, people said. A representative from Mallinckrodt declined to comment. Debtwire previously reported on negotiations to give bondholders equity and new debt. Most of the company's unsecured debt trades at around a quarter of its original value.
Mallinckrodt would be the third major opioid producer to file for bankruptcy amid an addiction crisis that kills more than 100 Americans every day. The companies are battling thousands of state, city and county plaintiffs who blame drug manufacturers and distributors for the epidemic of overdose deaths.
Previous cases
Purdue Pharma Inc., which entered Chapter 11 protection last year, proposed a settlement of the existing claims for $ 10 billion. Insys Therapeutics Inc. filed for bankruptcy in early 2019. Mallinckrodt sold more opioids in the US for years than any other company.
Mallinckrodt hired restructuring advisors late last year, Bloomberg reported, and management announced in February that it was seeking judicial protection. At the time, plans were made to settle his opioid claims through the bankruptcy of a small portion of the company, but he failed to get the support he needed from lenders.
The drug maker is also embroiled in a dispute with the U.S. Centers for Medicare & Medicaid Services over the pricing of Acthar Gel, its best-selling prescription drug used to treat autoimmune and rare diseases. A court ruled it had to pay more than $ 600 million in rebates.
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