WSJ: Mallinckrodt Considering Chapter 11 Bankruptcy Protection for Generics Unit

A prescription bottle of white pills spilling on a pile of $100 dollar bills

Drugmaker Mallinckrodt Plc has begun confidential discussions with creditors and is considering placing its U.S. generic drug business into bankruptcy to address the debt maturities and liabilities arising out of the opioid crisis, WSJ reported citing people familiar with the matter.

The company is considering a Chapter 11 filing covering its U.S. generics business, hoping to resolve claims from state and local governments stemming from the cost of combating opioid addiction, the report said.

Mallinckrodt did not immediately respond to Reuters request for comment.

Shares of the company fell 43% on resuming trade, after being halted.

A number of U.S. states and local governments have filed lawsuits against opioid drugmakers and wholesale distributors holding them accountable for a national drug addiction epidemic.

Earlier in 2019, the company had said it was focusing on separating its generics unit, which sells opioid drugs, from its specialty business.

OxyContin maker Purdue Pharma LP in September 2019 filed for bankruptcy to halt about 2,000 lawsuits and allow Purdue to negotiate legal claims with plaintiffs under the supervision of a U.S. bankruptcy judge.

Mallinckrodt is among several opioid manufacturers and distributors set to go to trial next month over allegations brought by New York Attorney General Letitia James related to the marketing and distributing of opioids.

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