Drugmaker Mallinckrodt has said the company and some of its units have filed for a second bankruptcy in 3 years in the U.S., with the newest restructuring plan set to reduce its debt by about $1.9 billion.
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Mallinckrodt plc announced that it has taken the next step to implement the comprehensive financial restructuring plan contemplated by a Restructuring Support Agreement (RSA) the company previously entered into with more than 85% of each of the company's first and second lien debtholders and the Opioid Master Disbursement Trust II.
Pursuant to the RSA and with the authorization of the company's Board of Directors, Mallinckrodt and certain of its subsidiaries yesterday initiated voluntary prepackaged Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware.
With the overwhelming support of its key stakeholders, the company expects to complete the court-supervised process in the fourth quarter of 2023.
Implementing the financial restructuring contemplated by the RSA will reduce the company's total funded debt by approximately $1.9 billion, increase free cash flow generation, extend maturity runway and better position the business for long-term success.
The RSA also provides for, among other consideration, a final, one-time payment of $250 million that was made to the Trust on August 24, 2023. This payment, in addition to the $450 million the company previously paid, is intended to support the Trust's mission to address the U.S. opioid crisis and fund addiction treatment.
Following Court approval, which the company expects to receive shortly, Mallinckrodt will have in excess of $450 million of liquidity comprising cash, commitments received for $250 million in new financing from certain of its creditors in connection with the RSA and new borrowing availability from lenders under its asset-based loans.
Together with cash generated from ongoing operations, this liquidity is expected to be sufficient to support the company's continued operations during the court-supervised process.
The company has filed a number of customary motions seeking Court approval to support its operations during this process, including the continued payment of employee wages, salaries and benefits without interruption.
Mallinckrodt expects to receive approval for these requests shortly. The company intends to pay vendors and suppliers in the ordinary course, including for any pre-petition amounts owed at the time of filing.
In connection with the Chapter 11 filing, Mallinckrodt also intends to make certain filings to commence Examinership Proceedings in Ireland, which are required to implement certain Irish law aspects of the financial restructuring and allow for emergence. ■