Drug-maker Mallinckrodt may renege on a $1.7 billion opioid settlement, putting the entire settlement at risk.
The situation: In a June 5 SEC filing, the company’s board revealed it might not make the scheduled $200 million opioid settlement payment next week.
* Mallinckrodt could file for a second bankruptcy, potentially wiping out the entire settlement.
* Victims could lose roughly $170 million in total compensation, while the rest of the money was to be allocated to state and local governments for drug treatment and healthcare programs.
The impact: If Mallinckrodt files a second bankruptcy, payouts would go first to company executives, staff, and other creditors, with opioid-related claims paid out last.
* Joseph Steinfeld, an attorney representing individuals harmed by Mallinckrodt’s medications, called the potential move “devastating” and underscored the damages caused by the company’s opioid sales.
The context: Mallinckrodt’s financial maneuver comes as drug makers, wholesale companies, and pharmacy chains involved in the prescription opioid crisis have agreed to pay out over $50 billion in settlements.
* Most firms involved in these agreements are larger and more financially stable than Mallinckrodt.
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