Mallinckrodt’s Bankruptcy Plan Would Cut Payments to Opioid Victims by $1 Billion

By John Mercury August 24, 2023

The revised plan still requires bankruptcy court approval. The company’s chief executive, Siggi Olafsson, said in a news release that the company “remained committed to ensuring that we achieved a meaningful resolution” for the trust set up to disburse settlement payments to victims. Mallinckrodt did not immediately return a request for additional comment.

The original settlement plan, finalized last year as Mallinckrodt exited its first bankruptcy, protected the company and its former executives from future liability related to its opioid sales.

Mallinckrodt last year made its first and only payment, of $450 million, under the original settlement agreement. The company is late on a second payment, which was due in June.

The revised plan was agreed to by a master trust that oversees the distribution of payments to subordinate trusts tasked with disbursing money to victims. Governments have begun receiving the initial funds. The money earmarked for individuals has not yet been disbursed but is expected to go out soon.

Joseph Steinfeld, a lawyer representing about half of the approximately 40,000 individuals who had been promised payments as part of the settlement, said that the revised plan would reduce the amount going to that group by about $100 million.

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