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Mallinckrodt Explores Repeat Filing; Long Island Diocese Can't Shield Parishes From Abuse Lawsuits
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Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Monday, June 5. In today's newsletter, one of the largest drugmakers bankrupted by the opioid crisis is exploring filing for chapter 11 a second time ahead of a settlement payment. And a bankruptcy judge allowed hundreds of sex-abuse lawsuits to resume against the seat of the Roman Catholic church in suburban Long Island, unimpressed with its chances of a successful reorganization.
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Mallinckrodt is required to make a payment to an opioid-victims compensation trust by mid-June.
Photo: Whitney Curtis/Associated Press
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Mallinckrodt explores repeat bankruptcy as $200 million opioid bill comes due. The drugmaker only emerged a year ago from a prior bankruptcy case but is now exploring a second trip through chapter 11, WSJ Pro Bankruptcy reports exclusively.
Mallinckrodt was one of several drugmakers bankrupted by lawsuits blaming the pharmaceutical industry for fueling opioid addiction. The company has faced financial headwinds since leaving bankruptcy and is now considering its options for the upcoming $200 million payment it agreed to make to resolve its opioid-related liabilities, people familiar with the natter said.
The payment coming due is the second of nine installments due over eight years, following Mallinckrodt's payment of an initial $450 million when it emerged from chapter 11. A repeat chapter 11 filing would land Mallinckrodt back before the same bankruptcy court that oversaw the company's existing case, which remains open.
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Negotiations between abuse survivors and the Diocese broke down months ago.
Photo: Mark Lennihan/Associated Press
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Judge Martin Glenn of the U.S. Bankruptcy Court in New York determined that harm to survivors from delaying their rights to pursue the parishes, which are separate corporations that haven’t filed for chapter 11, outweighed any harm to the diocese.
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FTX racks up $100 million in bankruptcy fees. Attorneys, investment bankers and consultants have been focused on finding money for FTX’s creditors by tracking down assets and selling the company's stakes. All that work has led to sizeable bills: FTX disclosed that it paid over $100 million in fees to such professionals through April 30.
Among those who collected fees were FTX’s white-shoe law firm Sullivan & Cromwell, which billed the company $45 million. FTX’s chief executive John J. Ray billed $1.7 million through his consulting firm, Owl Hill Advisory.
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Cyxtera's bankruptcy process begins. Shares of Cyxtera are trading lower after the company launched a prearranged Chapter 11 bankruptcy process to support its restructuring.
The stock was down 12% at 14 cents in premarket trading. As of the market close Friday, they had dropped almost 99% over the past 12 months.
The provider of data center locations and interconnection services said Sunday that the process is part of the restructuring agreement the company reached with lenders holding more than two-thirds of its outstanding term loan.
The company will continue to operate without interruption, Cyxtera said. Subsidiaries in Germany, Singapore and the U.K. are not included in the process.
Cyxtera also has received a commitment for $200 million in debtor-in-possession financing from some of the term lenders.
—Dean Seal
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Warren A. Brown received a notice last fall telling him the Randallstown, Md., home he lives in was subject to foreclosure because of an unpaid mortgage he hadn’t known existed.
Photo: Justin T. Gellerson for The Wall Street Journal
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Long-dormant mortgages are coming back to bite. Homeowners say they are getting bills and foreclosure threats on second mortgages they thought were taken care of long ago.
Many homeowners say they were unaware that their second mortgages still existed. Lenders often “charged off” these loans years ago, deeming them unlikely to be repaid after borrowers fell behind. Many homeowners stopped receiving monthly statements, giving them the impression that the obligation to pay had gone away.
It hadn’t. The lenders sold the second mortgages to other investors, sometimes for just pennies on the dollar.
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Photo: Nam Y. Huh/Associated Press
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Yury Vaskov is Ukraine’s deputy minister of infrastructure who oversees ports, including grain terminals. Photo: Hennadii Minchenko/ukrinform/Zuma Press
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American firms clash with Ukraine over soured grain deal. Some of Ukraine’s largest private foreign creditors have accused parts of the Kyiv government of impeding their efforts to recover assets following a grain company's $130 million loan default. The dispute, though still working its way through courts in Ukraine, the U.K. and Switzerland, highlights the challenges facing a government dependent on Western support but long plagued by allegations of corruption.
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