Drugmaker Mallinckrodt is talking to hedge funds about filing for bankruptcy and avoiding payments intended to help people addicted to opioids, .
As part of a prearranged deal, Mallinckrodt will propose to write off about $1 billion from what it still owes to addiction victims and state and local governments, while making a one-time payment of roughly $250 million, the report said, citing people familiar with the discussions.
Mallinckrodt did not immediately respond to a Reuters request for comment.
A group of hedge funds, including Greenwich and Silver Point Capital, is in negotiations with Mallinckrodt’s board to give them control of the business through a bankruptcy filing, according to people familiar with the discussions, the report said.
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Mallinckrodt, which is one of the largest manufacturers for opioids, had filed for bankruptcy protection nearly three years ago. It reached a $1.7 billion nationwide settlement as part of its bankruptcy reorganization plan and emerged from Chapter 11 last year.
The company in June said it was considering a second bankruptcy filing and other options after its lenders raised concerns over the $200 million payment related to opioid-related litigation.
Mallinckrodt, registered in Ireland as a public limited company, has U.S. offices in Missouri and New Jersey. Mallinckrodt’s U.S. subsidiary, Webster Groves-based SpecGx, and another generic drugmaker, Actavis Pharma, produced the vast amount of prescription opioids distributed throughout the country.
Mallinckrodt’s origin traces back to 1867 when three Mallinckrodt brothers founded a chemical concern in ºüÀêÊÓƵ that later became a major supplier of pharmaceuticals.
Beginning in the 1940s, the Mallinckrodt Chemical Works in downtown ºüÀêÊÓƵ processed uranium ore for the development of the first atomic bomb.
The Post-Dispatch contributed to this report.