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Report: Mallinckrodt considers restructuring, bankruptcy as opioid trial looms

Mallinckrodt PLC is considering a restructuring to temper possible legal liabilities over its alleged contribution in the U.S. opioid crisis, Bloomberg News reported, citing people with knowledge of the matter.

In Sept. 3, a U.S. District Court judge in Ohio ordered the U.K. drugmaker — along with other pharmaceutical companies such as Johnson & Johnson, Endo International PLC, Purdue Pharma LP, Allergan PLC and Teva Pharmaceutical Industries Ltd. — to face a trial set for Oct. 21 to determine whether their marketing practices proved catalytic to the painkiller addiction crisis.

Mallinckrodt is looking at options, including a bankruptcy filing, if costs run too high, the insiders told Bloomberg. The drugmaker also hired law firm Latham & Watkins LLP and turnaround firm AlixPartners LLP to advise on its options.

Meanwhile, Mallinckrodt is also brokering a deal with lawyers for the more than 2,000 plaintiff states, cities and counties for the possibility to avoid the Cleveland trial, the sources added. Allergan and Endo International have already made a $15 million settlement to avoid the said trial.

In August, the company suspended its plans to spin off its specialty generics and active pharmaceuticals ingredients business, citing uncertainties around the opioid litigation against the company.