Mallinckrodt’s Second Bankruptcy ‘Flagrant’ Case of Bad Plan

Drugmaker Mallinckrodt Plc‘s return to bankruptcy, where it will substantially reduce payments to opioid claimants, comes after it fell short of overly optimistic projections from its first Chapter 11.

Opioid claimants will now see their $1.7 billion settlement fund established through Mallinckrodt’s first bankruptcy slashed to $700 million as a result of the flawed financial forecasts embedded in the company’s prior restructuring plan, which faced little formal pushback in court.

The proposed reduction in settlement funds will be “devastating” to opioid claimants, said Joseph Steinfeld, an opioid victim lawyer with ASK LLP.

The company’s Chapter 11 filing on Monday ...