The High Court has appointed an interim examiner to a Dublin-based but US-run drugmaker.
At the High Court on Monday, Mr Justice Michael Quinn said he was satisfied to appoint Michael McAteer of Grant Thornton as interim examiner to Mallinckrodt Public Limited Company.
Mallinckrodt filed for bankruptcy in Delaware as the company, with €5.3 billion (€4.63 billion) in long-term debt, faced a string of US lawsuits accusing it of deceptively marketing opioids. While the company has no direct Irish employees, some 110 are resident in Ireland, and it has its centre of main residence in this jurisdiction.
'Complex case'
Mr Justice Quinn said this was a “complex case” where restructuring negotiations have been ongoing since prior to the opening of Chapter 11 proceedings in October 2020.
He said the provisional examiner could immediately bring his expertise and judgment to bear on the plan and this is critical to ensure confidence in the company. This, he ruled, was “sufficient justification” for the appointment pending a hearing of the petition later this month.
Earlier this month Mallinckrodt won US court approval to settle its opioid-related liabilities for approximately $1.7 billion and exit chapter 11 under a broader restructuring deal. The company, which is registered and incorporated in Ireland, requires court approval in this State before its Chapter 11 plan can take effect. It has said the reorganisation plan will reduce its debt by $1.3 billion.
Mallinckrodt is pursuing a US court-approved Chapter 11 reorganisation that would set up a $1.6 billion trust to resolve opioid-related claims with American states, local governments and private individuals.
Existing shares will be wiped out under the bankruptcy plan, while guaranteed unsecured bondholders are exchanging debt for ownership in the reorganised business.
Brian Kennedy SC, instructed by Arthur Cox, said the group has faced particular difficulties arising out of an “onslaught” of legal actions. He said the more than 3,000 legal cases brought against various Mallinckrodt companies have threatened the viability of the business and restructuring was necessary.
While the group believes it has a “meritorious defence”, the sheer volume of challenges has become more than it can handle, said Mr Kennedy. He also said the company’s trading and operations has also been “significantly impacted” by the Covid-19 pandemic.
Prospect of survival
An independent expert has assessed the company and believes it has a reasonable prospect of survival under the proposals if an interim examiner is appointed, said counsel.
He said the petitioners, who are company directors, believe the appointment of an interim examiner at the earliest opportunity is “critically important” as there is an urgent need to progress the reorganisation of the company and regain certainty.
Mr Kennedy said there was “at least a risk” that there would be some opposition to the petition, but he does not know if this will occur or what the nature of that opposition might be.
Mr Justice Quinn made various orders, including one appointing the interim examiner.
The case is due to return before the court for mention on February 24th, with the petition due to be heard the following week.
