Mallinckrodt has filed for Chapter 11 bankruptcy for all of its U.S. subsidiaries and some international subsidiaries, the company said Oct. 12.
The bankruptcy restructuring will reduce the company's total debt by about $1.3 billion and resolve opioid-related claims and litigation involving its drug Acthar.
"After many months of deliberation, negotiation and consideration of alternatives, Mallinckrodt's management and board of directors determined that implementing a Chapter 11 restructuring provides the best opportunity to maximize the value of the enterprise and position the company for the future in light of the current challenges it faces," said Mark Trudeau, Mallinckrodt's CEO.
Opioid claims against the company are to be channeled into one or more trusts which would receive $1.6 billion in structured payments. The company also agreed to pay $260 million over seven years to settle claims it knowingly underpaid Medicaid for Acthar.
In the bankruptcy filing, Mallinckrodt listed both assets and liabilities in the range of $1 billion to $10 billion.
The company will continue to operate as normal as it restructures for bankruptcy.
Mallinckrodt had said in February that it would put its U.S. generics business in bankruptcy as part of a proposed opioid settlement. In August, the company said it was considering bankruptcy for the parent company and most of its subsidiaries.
In early March, the U.S. sued Mallinckrodt, alleging it knowingly underpaid Medicaid hundreds of millions of dollars in rebates for Acthar. The U.S. Justice Department said the company had calculated its rebate payments to Medicaid based on the drug's price in 2013, but it has raised the drug's price by 20 percent since then. The company was ordered to pay $650 million to CMS.
As part of its bankruptcy filing, Mallinckrodt said it would reset Acthar's Medicaid rebate calculation as of July 1, and that state Medicaid programs will receive 100 percent rebates on Acthar Medicaid sales. The company said it will dismiss its appeal of the Justice Department's ruling in the case.
Read Mallinckrodt's full news release here.