© Reuters. Bottles of prescription painkillers Hydrocodine Bitartrate and Acetaminopohen, 5mg/325mg pills, made by Mallinckrodt sit on a shelf at a local pharmacy, in Provo, Utah, U.S., April 25, 2017. REUTERS/George Frey/file photo
By Pratik Jain and Dietrich Knauth
(Reuters) -Mallinckrodt on Tuesday said it was preparing to seek bankruptcy protection for the second time in three years after struggling to make a required $200 million settlement payment to opioid victims.
The drugmaker, one of the largest makers of opioids, said it is negotiating a restructuring support agreement with its stakeholders, while deferring deadlines for missed debt payments and opioid settlement payments to next week.
The agreement contemplates a second bankruptcy filing that would result in no recovery for holders of its ordinary equity shares, Mallinckrodt (OTC:) said.
The Ireland-based company failed to make scheduled payments to its lenders and opioid creditors in June, and it has sought several short-term extensions of the debt deadlines.
Mallinckrodt emerged from bankruptcy last year after winning court approval for a reorganization plan that included a $1.7 billion settlement. It paid the first $450 million of that settlement after emerging from bankruptcy, but it failed to make a $200 million payment due in June.
The company on Tuesday said it has reached an agreement to extend the opioid payment due date to Aug. 22.
Mallinckrodt’s noteholders also agreed to hold back legal action against the company until that date. As part of the agreement with noteholders, the company will pay $19 million, half of the payment originally due in June. It expects to pay the remaining amount when a potential restructuring support agreement is signed.
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