Shares of Mallinckrodt Plc [S: mnk] tumbled 31.2% in trading on Monday after the company said it had filed for Chapter 11 bankruptcy, in part due to a proposed billion-dollar settlement for its alleged role in the U.S. opioid crisis.
The drug maker said it aims to reduce total debt by $1.3 billion and to resolve opioid-related claims, as well as a False Claims Act lawsuit, Medicaid rebate lawsuit, and other legal matters. One or more trusts will get $1.6 billion in structured payments reserved for opioid claims, it said. The company had previously said in August that it may seek bankruptcy protection, an announcement that sent shares down 25% on Aug. 4. “We are now on a clear path to eliminating legal uncertainties, maximizing enterprise value, strengthening our balance sheet and moving ahead with our strategic plans,” CEO Mark Trudeau said in a news release. Mallinckrodt’s stock has tumbled 78.5% so far this year, compared with the S&P 500 SPX, +1.64%, which is up 7.6%.