MALLINCKRODT PLC Item 1.03. Bankruptcy or Receivership.
As previously disclosed, on
On
Summary of the Plan
The following is a summary of the material features of the Plan as confirmed by
the
The Plan provides for the following (amongst other things):
• Resolution of Opioid-Related Claims Against Mallinckrodt. Pursuant to the
Plan and the Scheme, on the Effective Date, all opioid claims against
Mallinckrodt and its subsidiaries were deemed to have been settled,
discharged, waived, released and extinguished in full against
Mallinckrodt and its subsidiaries, and Mallinckrodt and its subsidiaries
ceased to have any liability or obligation with respect to such claims,
which were then treated in accordance with the Plan as follows:
• Opioid claims were channeled to one or more trusts, which will
receive $1,725.0 million in structured payments consisting of
(i) a $450.0 million payment upon the Effective Date; (ii) a
$200.0 million payment upon each of the first and second
anniversaries thereof; (iii) a $150.0 million payment upon each of
the third through seventh anniversaries thereof; and (iv) a
$125.0 million payment upon the eighth anniversary thereof
(collectively, the "Opioid Deferred Payments"), with an
eighteen-month prepayment option at a discount for all but the
first payment. The terms of the Opioid Deferred Payments are set
forth in the Plan and an Opioid Deferred Cash Payments Agreement,
dated as of the Effective Date and incorporated into the
Confirmation Order.
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• Opioid claimants also received, in addition to other potential
consideration, warrants for approximately 19.99% of reorganized
Mallinckrodt's new outstanding shares, after giving effect to the
exercise of the warrants, but subject to dilution from equity
reserved under Mallinckrodt's management incentive plan,
exercisable at any time on or prior to the sixth anniversary of
the effectiveness of the Plan, at a strike price reflecting an
aggregate equity value for the reorganized Debtors of
$1,551.0 million .
• Following effectiveness of the Plan, certain Mallinckrodt
subsidiaries will remain subject to an agreed-upon operating
injunction with respect to the operation of their opioid business.
• Resolution of Disputes with the U.S. Department of Justice and Other
Governmental Parties Relating to Acthar Gel. On the Effective Date, all
claims of U.S. Department of Justice and other governmental parties
relating to Acthar Gel against Mallinckrodt were deemed to have been
settled, discharged, waived, released and extinguished in full against
Mallinckrodt, and Mallinckrodt ceased to have any liability or obligation
with respect to such claims, which were then treated in accordance with
the Plan and the terms of the settlement that is summarized below:
• Mallinckrodt and certain of its subsidiaries have reached an
agreement with the U.S. Department of Justice ("DOJ") and other
governmental parties to settle a range of litigation matters and
disputes relating to Acthar Gel (the "Governmental Acthar
Settlement") including a Medicaid lawsuit with the Centers for
Medicare and Medicaid Services , a related False Claims Act ("FCA")
lawsuit in Boston , and an Eastern District of Pennsylvania
("EDPA") FCA lawsuit principally relating to interactions of
Acthar Gel's previous owner (Questcor Pharmaceuticals Inc. ) with
an independent charitable foundation. Under the Governmental
Acthar Settlement, which was conditioned upon Mallinckrodt
commencing its chapter 11 proceeding and provides the
distributions the applicable claimants will receive under the
Plan, Mallinckrodt and certain of its subsidiaries have agreed to
pay $260.0 million to the DOJ and other parties over seven years
and reset Acthar Gel's Medicaid rebate calculation as of July 1,
2020 , such that state Medicaid programs will receive 100% rebates
on Acthar Gel Medicaid sales, based on current Acthar Gel pricing.
Also in connection with the Governmental Acthar Settlement,
Mallinckrodt entered into a five-year corporate integrity
agreement with the Office of Inspector General of the U.S.
Department of Health and Human Services in March 2022 . As a result
of these agreements, upon effectiveness of the Governmental Acthar
Settlement in connection with the effectiveness of the Plan, the
U.S. Government dropped its demand for approximately $640 million
in retrospective Medicaid rebates for Acthar Gel, the FCA lawsuit
in Boston has been dismissed, and the U.S. Government has agreed
to dismiss the EDPA FCA lawsuit. Similarly, state and territory
Attorneys General will also drop related lawsuits. In turn,
Mallinckrodt will dismiss its appeal of the U.S. District Court
for the District of Columbia's adverse decision in the Medicaid
lawsuit, which was filed in the U.S. Court of Appeals for the
District of Columbia Circuit .
• Mallinckrodt has entered into the Governmental Acthar Settlement
with the DOJ and other governmental parties solely to move past
these litigation matters and disputes and does not make any
admission of liability or wrongdoing.
• Modification of Mallinckrodt's Senior Secured Term Loans. Upon
effectiveness of the Plan and the Scheme, lenders holding allowed claims
in respect of Mallinckrodt's and certain of its subsidiaries' senior
secured term loans due September 2024 (the "2024 Term Loans") and its
senior secured term loans due February 2025 (the "2025 Term Loans")
received their pro rata share of new senior secured term loans in an
amount equal to the then-remaining principal amount of such claims
bearing interest at a rate per annum equal to LIBOR plus 5.25% (with
respect to the 2024 Term Loans) or LIBOR plus 5.50% (with respect to the
2025 Term Loan), maturing on September 30, 2027 and without any financial
maintenance covenant, and payment in cash of an exit fee equal to 1.00%
of such remaining principal amount.
• Repayment of the Mallinckrodt's Senior Secured Revolving Credit Facility.
Upon effectiveness of the Plan and the Scheme, all allowed claims under
Mallinckrodt's and certain of its subsidiaries' senior secured revolving
credit facility were paid in full in cash, principally with the proceeds
of newly incurred debt.
• Reinstatement of Mallinckrodt's 10.00% First Lien Senior Secured Notes
Due 2025. Upon effectiveness of the Plan and the Scheme, Mallinckrodt's
and certain of its subsidiaries' first lien senior secured notes due 2025
were reinstated at existing rates and maturities as the applicable
holders' purported make-whole claims were disallowed.
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• Modification of Mallinckrodt's 10.00% Second Lien Senior Secured Notes
Due 2025. Upon effectiveness of the Plan and the Scheme, lenders holding
allowed claims in respect of Mallinckrodt's and certain of its
subsidiaries' 10.00% second lien senior secured notes due 2025 received
their pro rata share of new 10.00% second lien senior secured notes due
2025 that have the same principal amount and other economic terms as the
existing second lien senior secured notes.
• Restructuring of Mallinckrodt's Guaranteed Unsecured Notes. Upon
effectiveness of the Plan and the Scheme, holders of allowed claims in
respect of Mallinckrodt's and certain of its subsidiaries' 5.75% senior
notes due 2022, 5.625% senior notes due 2023 and 5.50% senior notes due
2025 (the "Guaranteed Unsecured Notes") received their pro rata share of
$375.0 million of new 10.00% second lien senior secured notes due seven
years after effectiveness of the Plan and the Scheme and 100% of the new
Mallinckrodt ordinary shares, subject to dilution by the warrants
described above and Mallinckrodt's management incentive plan.
• Resolution of Other Remaining Claims. Pursuant to the Plan, on the
Effective Date, trade claims and other general unsecured claims,
including the claims of the holders of the 4.75% senior notes due April
2023 , against Mallinckrodt and the other Debtors were deemed to have been
settled, discharged, waived, released and extinguished in full, and
Mallinckrodt and the other Debtors ceased to have any liability or
obligation with respect to such claims, which are then treated in
accordance with the Plan, which provides for the holders of such claims
to share in $135.0 million in cash, plus other potential consideration
(including a portion (amounting to $35 million ) of the proceeds from the
sale of a priority review voucher, which occurred on June 30, 2022 ), in
accordance with the allocations as prescribed in the Plan.
• Cancellation of the Existing Shares. Pursuant to the Plan, on the
Effective Date the members of Mallinckrodt received no distribution and
all of the existing ordinary shares of Mallinckrodt and all rights
attaching or relating thereto will be cancelled.
Notwithstanding the making of the Confirmation Order, as of the date of the Original 8-K, consummation of the Plan remained subject to the satisfaction or waiver of various conditions precedent set forth therein. On the Effective Date, all such conditions were satisfied or waived and the Plan and the Scheme became effective.
The foregoing summary of the Plan does not purport to be complete and is qualified in its entirety by reference to the Plan, which is filed as Exhibit 2.1 to this Current Report on Form 8-K/A and incorporated into this Item 1.03 by reference.
Capital Structure
As of
There was no specific number of Mallinckrodt ordinary shares reserved for future issuance in respect of claims and interests filed and allowed under the Plan, which provided for the holders of the Guaranteed Unsecured Notes to receive all of the new ordinary shares to be issued by Mallinckrodt on the Effective Date (and for the issuance of the warrants described above and a new management . . .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description of Exhibit
2.1 Modified Fourth Amended Joint Plan of Reorganization (with Technical
Modifications) of Mallinckrodt Plc and Its Debtor Affiliates Under
Chapter 11 of the Bankruptcy Code, filed June 21, 2022 .
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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