Mallinckrodt Loan for Bankruptcy Exit Stumbles Amid Market Rout

Mallinckrodt Plc’s funding plan to exit bankruptcy has hit a snag as a drop in leveraged loan prices makes it harder for companies to sell risky debt.

The pharmaceutical firm’s $900 million loan deal -- an integral part of its reorganization -- is about a week past due. Morgan Stanley, which is managing the sale, is still working on the offering, and changes to the original terms are expected, according to a person with knowledge of the matter, who asked not to be identified discussing a private transaction.

A representative for Morgan Stanley declined to comment while another ...