- Opposition to the reorganization plan remains
- Settlement talks underway with opioid applicants
- Judge says messy case has come “a long way”
(Reuters) – Mallinckrodt Plc has gained court approval to begin soliciting votes for its draft reorganization plan, but is still working to gain more support from creditors and those looking to hold on to the company responsible for opioid-related injuries.
In a virtual hearing on Wednesday, U.S. bankruptcy judge John Dorsey in Wilmington, Delaware signed the disclosure documents Mallinckrodt will send to creditors to inform their vote on the plan. But opposition to the plan remains, several opponents withdrew their objections at the start of the vote on condition that their issues could still be debated during a hearing on the plan itself in september.
Mallinckrodt, represented by Latham & Watkins, filed for bankruptcy in October with $ 5.3 billion in funded debt to resolve widespread litigation brought by states, local governments and individuals accusing him of marketing opioids in a way misleading. The company is currently pursuing a reorganization plan that would create a $ 1.6 billion trust to resolve opioid claims.
Committees representing unsecured creditors and opioid claimants dropped their objections ahead of Wednesday’s hearing despite their remaining issues with the plan, including complaints that payments should be larger and that potential voters are not sufficiently warned of the vote. They agreed to cancel the canvassing process after Mallinckrodt agreed to make a concerted effort to inform applicants of their voting rights, including television and social media ads.
“I appreciate that everyone is working together on this topic. I know this is an extremely complex case with a lot of moving parts, ”Dorsey said. “I think it’s a long way.
The plan would give control of the company to holders of unsecured notes and eliminate $ 1.3 billion in debt. General unsecured creditors would split $ 150 million in cash.
Other concerns raised by creditors and the US Department of Justice’s bankruptcy watchdog, the US Trustee, regarding the plan’s proposed discharges for officers and directors will be addressed when the plan itself is submitted. for approval.
A plan confirmation hearing is scheduled for September 21 and could last several days if the company is unable to get the support it needs from the two committees, among others that have raised issues with the plan.
The plan is supported by most of the holders of certain unsecured notes from Mallinckrodt, a group of senior lenders and more than 1,300 counties, municipalities and other government entities, as well as nearly all of the US states.
The case is In re Mallinckrodt Plc, United States Bankruptcy Court, District of Delaware, No. 20-12522.
For Mallinckrodt: George Davis, George Klidonas, Andrew Sorkin, Anupama Yerramalli, Jeffrey Bjork, Elizabeth Marks of Latham & Watkins; and Mark Collins, Robert Stearn Jr, Michael Merchant, Amanda Steele, Robert Maddox of Richards, Layton & Finger
For the Unsecured Creditors Committee: Cullen Drescher Speckhart and Cathy Hershcopf de Cooley; and Natalie Ramsey of Robinson & Cole
For the Opioid Applicants Committee: Arik Preis, Mitchell Hurley and Sara Brauner of Akin Gump Strauss Hauer & Feld; and Justin Alberto and Seth Van Aalten by Cole Schotz