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February 25, 2020

Settlement Announcement Press Release

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Mallinckrodt’s Agreement in Principle for Global Opioid Settlement  

On February 25, 2020, Mallinckrodt plc (“Mallinckrodt” or the “Company”) announced that the Company and its specialty generics-focused subsidiaries Mallinckrodt LLC, SpecGx LLC and certain other affiliates (collectively, “Specialty Generics”) reached an agreement in principle on the terms of a global settlement that would resolve all opioid-related claims against the Company, Specialty Generics, and the Company’s other subsidiaries.

The agreement in principle was reached with a court-appointed plaintiffs’ executive committee representing the interests of thousands of plaintiffs in the opioid multidistrict litigation1, and is supported by a broad-based group of 47 state and U.S. Territory Attorneys General.

Under the terms of the proposed settlement, which would become effective upon Specialty Generics’ emergence from a contemplated Chapter 11 process, subject to court approval and other conditions:

  • Plaintiffs would receive $1.6 billion, comprising $300 million upon Specialty Generics’ emergence from Chapter 11 and $1.3 billion in structured increments over eight years, beginning upon effectiveness of the settlement. The substantial majority of those payments are expected to be contributed into a trust which, among other things, would establish an abatement fund to be administered to cover the costs of opioid-addiction treatment and related efforts;
  • Upon Specialty Generics’ emergence from the contemplated Chapter 11 process, the trust would receive warrants, exercisable at $3.15 per share, to purchase ordinary shares that would represent approximately 19.99% of the Company’s fully-diluted outstanding shares, including after giving effect to the exercise of the warrants; and
  • Specialty Generics would abide by certain agreed-upon operating covenants.

To implement the proposed settlement, the Company expects that Specialty Generics, which manufactures certain generic opioid products, among other products, will file voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the coming months. Mallinckrodt’s Specialty Brands business and related subsidiaries would not be part of the contemplated Chapter 11 process.

The court-supervised process is expected to lead to the creation of a trust which, among other things, would establish an abatement fund to offset the expense of helping to combat opioid addiction and providing support to communities impacted by opioid abuse. The process is also expected to provide a fair, orderly, efficient and legally binding mechanism to resolve all opioid-related claims against Mallinckrodt, Specialty Generics and all of Mallinckrodt’s other subsidiaries.

In terms of next steps, the Company is engaging with plaintiffs to finalize the details and satisfy the terms of the agreement in principle. Mallinckrodt intends to work through this process as quickly and efficiently as possible.

Importantly, Mallinckrodt and all of our businesses are operating as normal, and we fully expect to continue operating normally during this process.

We remain focused on developing and bringing to market therapies for all currently served patients, including for underserved patients with severe and critical conditions.

Investor Relations
Daniel J. Speciale, CPA
Vice President, Investor Relations and IRO
314-654-3638
daniel.speciale@mnk.com

Media
Michael Freitag / Aaron Palash / Aura Reinhard
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449

1 Captioned In re National Prescription Opiate Litigation, Case No. 17-md-2804 (N.D. Ohio).