Wed 10/14/2020 18:09 PM
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Judge John Dorsey granted the Mallinckrodt chapter 11 filing debtors’ requested first day relief on an uncontested basis at a hearing this afternoon, including their request for authority to use prepetition secured lenders’ cash collateral on an interim basis. However, Scott Greenberg of Gibson Dunn, counsel for the ad hoc group of first lien term lenders, stressed to the judge that although the group has agreed to the use of its cash collateral for now, the first lien lenders are not parties to the debtors’ restructuring support agreement and intend to oppose reinstatement of their claims as currently contemplated by the RSA. Continue reading for the Americas Core Credit by Reorg team's coverage of the Mallinckrodt chapter 11 filing, and request a trial to access our updates on thousands of other chapter 11 filings in the U.S.

Reorg’s live coverage of the hearing can be found HERE (when logged in to Reorg).

In addition to the first liens, counsel for litigation claimants voiced concerns regarding the RSA deal. Kevin Maclay of Caplin & Drysdale, counsel for the “Multi-State Governmental Entities Group” of more than 1,300 opioid plaintiffs, said that his group has not agreed to the $1.6 billion opioid settlement contained in the RSA. Maclay pledged to discuss the proposed opioid settlement with the debtors over the next two weeks, but added that if the group cannot come to terms with the debtors, Judge Dorsey “might be hearing a lot more from us.”

Scott Bickford, appearing for a class of children born with opioid dependence, also voiced reservations with the RSA and opioid settlement. Bickford told Judge Dorsey that he is concerned the childrens’ interests are not being represented by the plaintiffs executive committee, or PEC, that has signed on to the RSA opioid deal. Bickford said that the PEC represents “municipalities and governmental entities” rather than the class.

Finally, Donald Haviland, counsel for the City of Rockford, Ill., in its Acthar antitrust litigation against Mallinckrodt ARD, told the judge that his client had been “ambushed” by the filing. Haviland estimated that his client’s claim could reach as much as $10 billion, and said that he “vehemently opposes” the debtors’ proposed injunction barring governmental entities from pursuing claims against the debtors for at least 270 days.

George Davis of Latham & Watkins, counsel for the debtors, struck a conciliatory tone, telling the judge that the debtors intend to spend the first two months of the case trying to bring as many creditors as possible on board with the RSA. Davis characterized the RSA as the “cornerstone” on which further consensus could be built. Davis also said that the debtors are hopeful they will emerge well before the milestones set forth in the RSA: 12 months from the petition date for the filing of a plan and 18 months for confirmation.

Judge Dorsey set a second day hearing for Nov. 10 at 11 a.m. ET.
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