Mallinckrodt, a pharmaceutical company, announced on Monday that it has entered into forbearance agreements with its lenders. These agreements provide the company with approximately one month’s time to fulfill missed interest payments.
Initially, Mallinckrodt had deferred a $200 million payment to a compensation trust for opioid victims, with the deadline now set for August 15. This payment had been delayed week-by-week since June.
Under the forbearance agreements with creditors, Mallinckrodt has until August 15 to make the interest payments it missed the previous month. In return, specific bondholders have agreed not to exercise their rights in case of the company’s default until that date.
Having emerged from bankruptcy in 2022, Mallinckrodt had already settled a substantial amount of its obligations related to its involvement in the opioid crisis. Initially required to pay $1.7 billion, the company promptly paid $450 million as a lump sum. The Wall Street Journal recently reported that Mallinckrodt is now seeking to renegotiate the remaining $1.2 billion in payments under the settlement, aiming to reduce it to a range of $200 million to $300 million.