Drugmaker Mallinckrodt (MNK) - Get Report became the third major opioid producer to file for bankruptcy, weighed down by thousands of U.S. lawsuits from states, cities and counties that have blamed drugmakers and distributors for the epidemic of overdose deaths.
"After many months of deliberation, negotiation and consideration of alternatives, Mallinckrodt's management and board of directors determined that implementing a Chapter 11 restructuring provides the best opportunity to maximize the value of the enterprise and position the company for the future in light of the current challenges it faces," said Mark Trudeau, Mallinckrodt's president and CEO, in a statement.
The company said it entered into a restructuring agreement that would reduce its debt by about $1.3 billion. The company also said it aims to resolve all opioid litigation while in bankruptcy protection.
Mallinckrodt listed estimated liabilities of $1 billion to $10 billion in its bankruptcy filing and assets in the same range.
Purdue Pharma, the maker of the maker of OxyContin that entered Chapter 11 protection in September 2019, has proposed a $10 billion settlement of existing claims. Insys Therapeutics also filed for bankruptcy in 2019.
The Centers for Disease Control has estimated that every day in the U.S. 130 people die from an opioid-related drug overdose.
Mallinckrodt hired restructuring advisers late last year, and management disclosed in February that it was pursuing court protection.
The plan at that time was to settle its opioid claims by putting a small part of the company into bankruptcy, but it failed to gain required support from lenders.
The stock fell 31.19% to 75 cents on Monday.