Why did Mallinckrodt file for bankruptcy a second time?
Barely a year after its first restructuring, Mallinckrodt filed again in August 2023 — cutting its remaining $1.275 billion opioid trust obligation to a one-time $250 million payment, reducing the total paid from $1.6 billion to $700 million.
In August 2023, barely a year after its first restructuring, Mallinckrodt filed a second prepackaged Chapter 11. According to the Washington Post, the plan allowed it to pay nearly $1 billion less to the opioid trust than originally agreed. The opioid trust explained that with $1.275 billion in deferred payments still owed and the company's finances deteriorating, it faced the prospect of being subordinate to about $3.5 billion in secured debt in an uncontrolled bankruptcy.
It therefore accepted a one-time $250 million payment, on top of $450 million already paid, in full satisfaction. The second plan took effect on November 14, 2023 and cut Mallinckrodt's debt by more than $1.9 billion. Advocates for opioid victims criticised the outcome as a second write-down of money meant for addiction treatment.