Opioid Manufacturer Mallinckrodt Heading Towards Bankruptcy
Opioid drug manufacturer Mallinckrodt PLC may seek Chapter 11 bankruptcy protection as the latest casualty in the nationwide opioid crisis. According to a recent article by Bloomberg, the company is working with external advisers, creditors and litigation claimants and is considering all options to address legal and financial challenges. The bankruptcy filing is expected to include Mallinckrodt’s main businesses and most subsidiaries. Some speculate the filing could take place in the fourth quarter of 2020.
The company’s stock (NYSE: MNK) which was a high-flyer in 2015 peaking at $134 per share, closed yesterday at $0.81.
Early in 2020, Mallinckrodt was struggling to avoid the fate of Purdue Pharma which filed for bankruptcy in 2019 and is planning to hand over all of its assets to parties suing over the company’s role in the U.S. opioid crisis. Mallinckrodt’s original plan was to throw parts of the conglomerate into bankruptcy in an effort to save the viable parts of the company’s balance sheet. Hopes for that strategy are fading as legal claims by creditors and those injured by opioids are mounting to overwhelming portions.
According to Bloomberg, Mallinckrodt’s decision and timing over whether to file Chapter 11 may be influenced by a looming trial in Tennessee next month. The firm’s generics unit, along with Endo International PLC, face claims by a local prosecutor that the companies illegally marketed opioids and swamped the state with painkillers. Mallinckrodt is facing similar charges in New York. Filing bankruptcy would force a stay on all pending litigation.
Prosecutors claim that Mallinckrodt sold more opioids in the U.S than any other manufacturer during the height of the addiction crisis. Mallinckrodt is also the largest manufacturer of generic opioids in the U.S.
In February 2020, Mallinckrodt announced a $1.6 billion tentative agreement to settle thousands of lawsuits brought by state and local governments over its role in the opioid crisis. The agreement was endorsed by 47 states along with a committee of lawyers representing thousands of cities and counties. According to the New York Times, Mallinckrodt was the first opioid manufacturer to reach a tentative national settlement agreement with municipal governments and most of the states.
Based on reports from the Centers for Disease Control and Prevention, from 1999 to 2017 almost 218,000 people died in the United States from overdoses related to prescription opioids. According to the C.D.C report, the opioid-related deaths were five times higher in 2017 than they were in 1999.
For plaintiffs’ attorneys, the bankruptcy represents an opportunity to represent claimants who have been injured by the nationwide opioid epidemic. Much like the recent Purdue Pharma bankruptcy, we anticipate thousands of injured parties will come forward with claims seeking damages from Mallinckrodt.