MALLINCKRODT PLC Item 1.01. Entry into a Material Definitive Agreement.
Resolution of Opioid-Related Claims
Pursuant to the Plan and the Scheme of Arrangement, 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 treated in accordance with the Plan as follows:
• Opioid claims will be channeled to certain trusts, which will receive
$1,725.0 million in deferred payments from Mallinckrodt and certain of
its subsidiaries consisting of (i) a $450.0 million payment on the
Effective Date; (ii) a $200.0 million payment upon each of the first and
second anniversaries of the Effective Date; (iii) a $150.0 million
payment upon each of the third through seventh anniversaries of the
Effective Date; and (iv) a $125.0 million payment upon the eighth
anniversary of the Effective Date (collectively, the "Opioid Deferred
Payments"), with Mallinckrodt retaining an eighteen-month option to
prepay outstanding Opioid Deferred Payments (other than the initial
Effective Date payment) at a discount (and to prepay the Opioid Deferred
Payments at their undiscounted value even after expiration of such
eighteen-month period). 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
(such agreement,
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the "Opioid Deferred Cash Payments Agreement"). The Opioid Deferred
Payments are unsecured and are guaranteed by Mallinckrodt and its
subsidiaries that are borrowers, issuers or guarantors under the Takeback
Term Loans and the New 1L Notes, Existing 1L Notes, New 2L Notes and
Takeback 2L Notes (such notes collectively, the "Effective Date Notes")
(except for the Effective Date Notes, as defined and described further
below), and certain future indebtedness (subject to certain exceptions).
The Opioid Deferred Cash Payments Agreement contains affirmative and
negative covenants (including an obligation to offer to pay the Opioid
Deferred Payments without discount upon the occurrence of certain change
. . .
Item 1.02. Termination of Material Definitive Agreement.
Restructuring Support Agreement
On the Effective Date, the Restructuring Support Agreement (the "RSA") entered into by Mallinckrodt, as part of a prearranged plan of reorganization, was terminated pursuant to its terms.
Equity Interests
Pursuant to the Scheme of Arrangement, on the Effective Date, all of the existing ordinary shares of Mallinckrodt and all rights attaching or relating thereto were cancelled and such equity interests were deemed to have no further force or effect. On the Effective Date, Mallinckrodt issued new Mallinckrodt Ordinary Shares to holders of the Guaranteed Unsecured Notes, subject to dilution by the Warrants and the MIP.
Debt Instruments
Satisfaction of Existing Term Loans and Repayment of Existing Revolver
Pursuant to the Plan and Scheme of Arrangement, on the Effective Date, lenders
holding allowed claims in respect of the existing senior secured term loans due
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incurred by the Issuers received their pro rata share of the 2017 Replacement Term Loans (in the case of the 2024 Term Loans) or the 2018 Replacement Term Loans (in the case of the 2025 Term Loans) and payment in cash of an exit fee equal to 1.00% of such remaining principal amount in satisfaction thereof.
Pursuant to the Plan and Scheme of Arrangement, on the Effective Date, lenders'
allowed claims in respect of the existing
As a result of the satisfaction of the Existing Term Loans and the repayment of
the Existing Revolver pursuant to the Plan and the Scheme of Arrangement,
Mallinckrodt and its subsidiaries terminated the Credit Agreement, dated as of
Satisfaction of 10.000% Second Lien Senior Secured Notes due 2025
Pursuant to the Plan and Scheme of Arrangement, on the Effective Date, lenders holding allowed claims in respect of the Issuers' existing 10.000% second lien senior secured notes due 2025 (the "Existing 2L Notes") received their pro rata . . .
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-balance Sheet Arrangement of a Registrant.
The descriptions of the following agreements set forth under Item 1.01 above are incorporated by reference herein: (i) Resolution of Opioid-Related Claims, (ii) Settlement Agreements, (iii) Takeback Term Loans, (iv) 11.500% First Lien Senior Secured Notes due 2028, (v) Existing 10.000% First Lien Senior Secured Notes due 2025, (vi) 10.000% Second Lien Senior Secured Notes due 2025, (vii) 10.000% Second Lien Senior Secured Notes due 2029 and (viii) Accounts Receivable Financing Facility.
Item 3.02. Unregistered Sales of
On the Effective Date, Mallinckrodt issued the following in accordance with the Plan and Scheme of Arrangement:
• 13,170,932 new Mallinckrodt Ordinary Shares were issued to holders of the
Guaranteed Unsecured Notes; and
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• 3,290,675 Warrants to purchase 3,290,675 new Mallinckrodt Ordinary Shares
were issued to the opioid claimants.
As of the Effective Date, there were 13,170,932 shares of new Mallinckrodt Ordinary Shares (symbol MNKPF) and 3,290,675 Warrants issued and outstanding.
The new Mallinckrodt Ordinary Shares and the Warrants issued pursuant to the Plan were issued pursuant to the exemption from the registration requirements of the Securities Act under Section 1145 of the Bankruptcy Code, which generally exempts from such registration requirements the issuance of certain securities under a plan of reorganization.
Item 3.03. Material Modification to Rights of Security Holders.
Except as otherwise provided in the Plan and Scheme of Arrangement, all notes, equity, agreements, instruments, certificates and other documents evidencing any security interest of Mallinckrodt were cancelled on the Effective Date. The securities cancelled on the Effective Date include all of the existing ordinary shares of Mallinckrodt. For further information, see the Explanatory Note and Items 1.01, 1.02, 3.02, 5.01 and 5.03 of this Current Report on Form 8-K, which are incorporated herein by reference.
Item 5.01. Changes in Control of Registrant.
As discussed elsewhere in this Current Report, as of the Effective Date, all of the existing ordinary shares of Mallinckrodt were cancelled and pursuant to the Plan and Scheme of Arrangement, Mallinckrodt issued 100% of the new Mallinckrodt Ordinary Shares to holders of the Guaranteed Unsecured Notes. In addition, all of the opioid claimants will receive, in addition to other potential consideration, warrants for approximately 19.99% of reorganized Mallinckrodt's new Ordinary Shares, after giving effect to the exercise of the Warrants (but subject to dilution from equity reserved under the MIP), exercisable at any time on or prior to the sixth anniversary of the effectiveness of the Plan.
For further information, see the Explanatory Note and Items 1.01, 1.02, 3.02 and 5.03 of this Current Report on Form 8-K, which are incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Departure of Officers and Directors
As of the Effective Date,
The foregoing description of the Separation Agreement does not purport to be complete and is qualified in its entirety by reference to the Separation Agreement, which is filed as Exhibit 10.9 to this Current Report on Form 8-K and incorporated herein by reference.
In addition, the following directors of the board of directors of Mallinckrodt
(the "Board") also resigned from their roles as directors of Mallinckrodt (and
any committees of the Board thereof) (collectively, the "Director
Resignations"):
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None of the directors or officers have resigned as a result of any disagreement with Mallinckrodt on any matter relating to its operations, policies or practices.
Appointment of Directors
As of the Effective Date and immediately following the Director Resignations,
the following individuals were appointed directors of Mallinckrodt:
• Paul Bisaro : Mr. Bisaro has more than 30 years of leadership experience
at generic and branded pharmaceutical companies and a track record of
driving growth through operational execution and corporate
transformation. Mr. Bisaro previously served as president, chief
executive officer and a director on the board of Impax Laboratories from
2016 to 2018, and as executive chairman of Amneal Pharmaceuticals until
2019 following its 2018 merger with Impax. Prior to Impax, Mr. Bisaro was
executive chairman of Allergan from 2014 to 2016, and president and chief
executive officer of Actavis (and its predecessor firm Watson
Pharmaceuticals ) from 2007 to 2014, where he served on the board from
2007 until 2018. From 1999 to 2007, he served as president, chief
operating officer and a director on the board of Barr Pharmaceuticals .
Earlier in his career, he worked as an attorney for Winston & Strawn and
. . .
Item 5.03. Amendments to Articles of Incorporation or Bylaws.
Effective as of the Effective Date, and pursuant to the Scheme of Arrangement, the new memorandum and articles of association (together, the "New Articles of Association") were adopted, which replaced and superseded the prior Amended and Restated Memorandum and Articles of Association (together, the "Prior Articles of Association"), respectively. Set forth below are the principal changes to the Prior Articles of Association, as reflected in the New Articles of Association.
Share Capitalization
The New Articles of Association provide that the authorized share capital of
Mallinckrodt is
The Prior Articles of Association provided that the authorized share capital of
Mallinckrodt was
Record Date for Dividends and Other Distributions
The New Articles of Association provide that the record date for determining the shareholders entitled to receive payments of dividends and other distributions or allotment of any rights, or for determining the shareholders entitled to exercise any rights in respect of any change, conversion or exchange of shares, or any other lawful action, must be not more than 60 days prior to such action.
The Prior Articles of Association provided that the record date for determining the shareholders entitled to receive payments of dividends and other distributions or allotment of any rights, or for determining the shareholders entitled to exercise any rights in respect of any change, conversion or exchange of shares, or any other lawful action, was required to be not more than 30 nor less than two days prior to such action.
Chairman of General Meetings of Mallinckrodt
The New Articles of Association provide that, if there is no chairman of the Board, or if he or she is not present within 15 minutes after the time appointed for the holding of a general meeting or is unwilling to act, any director or other person designated by the Board (or, if the Board has not designated any such person prior to the meeting or such person is not present within 15 minutes after the time appointed for the holding of the meeting or is unwilling to act, such an officer or director or any other person elected by the directors present at the meeting) will preside as chairman of the meeting.
The New Articles of Association further provide that, if at any general meeting no person designated in accordance with the above-described article is willing to act as chairman or if no such person is present within 15 minutes after the time appointed for holding the meeting, the shareholders present at the meeting will choose one of their number to be chairman of the meeting.
The Prior Articles of Association provided that, if there was no chairman of the Board, or if he or she was not present within 15 minutes after the time appointed for the holding of the meeting or was unwilling to act, the directors present would elect one of their number to serve as chairman of the meeting.
The Prior Articles of Association further provided that, if at any general meeting no director designated in accordance with the above-described article . . .
Item 7.01. Regulation FD Disclosure.
In connection with its emergence from the chapter 11 and Irish examinership proceedings, Mallinckrodt issued a press release on the Effective Date, a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
The information contained in this Item 7.01, including Exhibit 99.1, shall be deemed to be "furnished" and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section, nor shall such information be deemed incorporated by reference into any filing under the Securities Act, or the Exchange Act.
Item 8.01. Other Events.
In connection with the Governmental Acthar Settlement, Mallinckrodt has entered
into separate settlement agreements with the fifty states, the
On
Cautionary Statements Related to Forward-Looking Statements
Statements in this document that are not strictly historical, including statements regarding future financial condition and operating results, legal, economic, business, competitive and/or regulatory factors affecting Mallinckrodt's businesses, and any other statements regarding events or developments Mallinckrodt believes or anticipates will or may occur in the future, may be "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a number of risks and uncertainties.
There are a number of important factors that could cause actual events to differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. These factors include risks and uncertainties related to, among other things: the effects of the Chapter 11 cases on the liquidity, results of operations and businesses of Mallinckrodt and its subsidiaries; governmental investigations and inquiries, regulatory actions and lawsuits brought against Mallinckrodt by government agencies and private parties with respect to its historical commercialization of opioids, including the agreement set forth in the Plan regarding a global settlement to resolve all opioid-related claims; the settlement set forth in the Plan with governmental parties to resolve certain disputes relating to Acthar Gel; the ability to maintain relationships with Mallinckrodt's suppliers, customers, employees and other third parties as a result of, and following, the Chapter 11 cases; the possibility that Mallinckrodt may be unable to achieve its business and strategic goals even now that the
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Plan is successfully consummated; the nondischargeability of certain claims
against Mallinckrodt as part of the bankruptcy process; developing, funding and
executing Mallinckrodt's business plan and continuing as a going concern;
Mallinckrodt's post-bankruptcy capital structure; scrutiny from governments,
legislative bodies and enforcement agencies related to sales, marketing and
pricing practices; pricing pressure on certain of Mallinckrodt's products due to
legal changes or changes in insurers' reimbursement practices resulting from
recent increased public scrutiny of healthcare and pharmaceutical costs; the
impact of the outbreak of the COVID-19 coronavirus; the reimbursement practices
of governmental health administration authorities, private health coverage
insurers and other third-party payers; complex reporting and payment obligations
under the Medicare and Medicaid rebate programs and other governmental
purchasing and rebate programs; cost containment efforts of customers,
purchasing groups, third-party payers and governmental organizations; changes in
or failure to comply with relevant laws and regulations; Mallinckrodt's and its
partners' ability to successfully develop or commercialize new products or
expand commercial opportunities; Mallinckrodt's ability to navigate price
fluctuations; competition; Mallinckrodt's and its partners' ability to protect
intellectual property rights; limited clinical trial data for Acthar Gel;
clinical studies and related regulatory processes; product liability losses and
other litigation liability; material health, safety and environmental
liabilities; potential indemnification liabilities to Covidien pursuant to the
separation and distribution agreement; business development activities;
retention of key personnel; the effectiveness of information technology
infrastructure including cybersecurity and data leakage risks; customer
concentration; Mallinckrodt's reliance on certain individual products that are
material to its financial performance; Mallinckrodt's ability to receive
procurement and production quotas granted by the
The "Risk Factors" section of Mallinckrodt's most recent Annual Report on Form
10-K and other filings with the
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 .
3.1 New Memorandum and Articles of Association.
4.1 Warrant Agreement, dated June 16, 2022 .
11.500% First Lien Senior Secured Notes due 2028 Indenture, dated
4.2 June 16, 2022 .
Form of 11.500% First Lien Senior Secured Note due 2028 (included in
4.3 Exhibit 4.2).
4.4 Supplemental Indenture No. 4, dated June 16, 2022 .
10.000% Second Lien Senior Secured Notes due 2025 Indenture, dated
4.5 June 16, 2022 .
Form of 10.000% Second Lien Senior Secured Notes due 2025 (included
4.6 in Exhibit 4.5).
10.000% Second Lien Senior Secured Notes due 2029 Indenture, dated
4.7 June 16, 2022 .
Form of 10.000% Second Lien Senior Notes due 2029 (included in
4.8 Exhibit 4.7).
10.1 Opioid Deferred Cash Payments Agreement, dated June 16, 2022 .
10.2 Settlement Agreement, dated as of March 7, 2022 , among the United
States of America , acting through the United States Department of
Justice and on behalf of the Office of Inspector General of the
Department of Health and Human Services, Mallinckrodt plc ,
Mallinckrodt ARD LLC and James Landolt (incorporated by reference to
Exhibit 10.1 of Mallinckrodt's Current Report on Form 8-K filed with
the Securities and Exchange Commission on March 11, 2022 ).
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10.3 Settlement Agreement, dated as ofMarch 7, 2022 , amongthe United States of America , acting through theUnited States Department of Justice and on behalf of theOffice of Inspector General of the Department of Health and Human Services,Mallinckrodt plc ,Mallinckrodt ARD LLC ,Charles Strunck ,Lisa Pratta andScott Clark (incorporated by reference to Exhibit 10.2 of Mallinckrodt's Current Report on Form 8-K filed with theSecurities and Exchange Commission onMarch 11, 2022 ). 10.4 Registration Rights Agreement, datedJune 16, 2022 . 10.5 Credit Agreement, datedJune 16, 2022 . 10.6 Note Purchase Agreement, datedJune 15, 2022 . 10.7 Receivables Financing Credit Agreement, datedJune 16, 2022 . 10.8 Purchase and Sale Agreement, datedJune 16, 2022 . 10.9 Separation of Employment Agreement and General Release, by and betweenMark Trudeau andST Shared Services LLC , datedJune 16, 2022 . Employment Agreement, by and betweenMallinckrodt plc and Sigurdur 10.10 Olafsson, datedJune 16, 2022 . 10.11 Letter Agreement, by and betweenHugh O'Neill andMallinckrodt plc . 10.12 Letter Agreement, by and betweenSteven Romano andMallinckrodt plc . 10.13 Mallinckrodt Pharmaceuticals 2022 Stock and Incentive Plan. Form of Deed of Indemnification by and betweenMallinckrodt plc and 10.14 Directors and Secretary. Form of Deed of Indemnification by and betweenMallinckrodt plc and 10.15 Officers. Form of Indemnification Agreement by and betweenSucampo 10.16Pharmaceuticals, Inc. and Directors and Secretary. 99.1 Press Release, datedJune 16, 2022 . Cover Page Interactive Data File (embedded within the Inline XBRL 104 document). 20
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