Mallinckrodt Bankruptcy Reveals $21 Million Paid to Big Law Trio

Mallinckrodt PLC, a specialty pharmaceutical manufacturer that has filed for bankruptcy twice in the past three years, paid more than $21.7 million to three law firms ahead of its second insolvency filing last month.

The drug giant disclosed in a series of Sept. 13 filings in its so-called Chapter 22 case in Delaware that Latham & Watkins, Hogan Lovells, and Wachtell, Lipton, Rosen & Katz collectively billed Mallinckrodt for that sum in the 90 days prior to a prepackaged bankruptcy that began on Aug. 28. Some lawyers from those firms are billing the debtor at more than $2,000 per hour.

Mallinckrodt, based in suburban St. Louis and Dublin, Ireland, is also being represented by lawyers from Irish law firm Arthur Cox and Delaware’s Richards, Layton & Finger. A spokeswoman for Mallinckrodt, whose chief legal officer is Mark Tyndall, declined to comment about the company’s legal fees.

The company’s proposed restructuring plan seeks to slash its funded debt by $1.9 billion and grant a one-time $250 million payment to opioid victims, thereby trimming by $1 billion a deal that Mallinckrodt reached last year to resolve its opioid crisis liabilities with US states, hospitals, and individuals.

Mallinckrodt already paid $450 million into a trust for opioid plaintiffs after emerging last year from a prior bankruptcy proceeding it began in 2020.

Latham, lead bankruptcy counsel to Mallinckrodt, disclosed Wednesday that it received fee advances totaling almost $12.4 million during the 90-day period prior to the company’s Chapter 11 filing. Latham is granting Mallinckrodt a 7% discount on some intellectual property matters unrelated to its bankruptcy.

Another filing by Latham noted that partners from the firm are billing between $1,360 to $2,230 per hour for their services, while associates and counsel are clocking in between $705 to $1,690 per hour. Latham, which has represented the company since 2014, took the lead for Mallinckrodt on the deal that smoothed the way for its contentious Chapter 11 exit last year.

Wachtell, special finance and corporate counsel to Mallinckrodt, disclosed payments and retainers from the company totaling nearly $7.4 million in the run-up to its second insolvency. Wachtell partners, of counsel, and counsel are billing between $1,500 to $2,100 per hour, while associates at the firm range from $800 to $975 per hour for Mallinckrodt-related work, according to its filing.

Hogan Lovells received more than $1.9 million in payments and retainers from Mallinckrodt for its work as investigation, litigation, and regulatory counsel to the company. Hogan Lovells partners and counsel are billing between $810 and $1,905 per hour with associates from the firm ranging between $550 to $1,130 per hour, according to its filing in the case.

Richards Layton, which is serving as local bankruptcy counsel to Mallinckrodt, hasn’t yet submitted billing statements with the court. The Delaware firm’s counsel and partners are billing between $850 and $1,325 per hour and its associates at rates ranging from $495 to $750 per hour, according to its filing.

Gibson, Dunn & Crutcher and Paul, Weiss, Rifkind, Wharton & Garrison are representing first- and second-lien creditors in Mallinckrodt’s bankruptcy, while a group of noteholders have turned to Davis Polk & Wardwell for counsel.

Mallinckrodt’s most recent proxy statement shows that it paid more than $3.1 million in total compensation to its top lawyer, Tyndall, in 2022. Henriette Nielsen, the company’s chief transformation officer and a former general counsel at Actavis Inc., received a pay package of nearly $2.1 million. Nielsen and Tyndall became part of Mallinckrodt’s revamped C-suite in August 2022.

Tyndall took over from Mallinckrodt’s longtime former legal chief, Mark Casey, who left the company in September 2022. Casey announced last month that he’s become the new top lawyer for Bryn Pharma LLC, a privately held pharmaceutical company co-founded by former private equity lawyer Steven Hartman. Bryn Pharma hired another former Mallinckrodt executive, Sandy Loreaux, earlier this year to serve as its new chief executive officer.

Mallinckrodt’s most recent bankruptcy case is Mallinckrodt PLC, No. 23-bk-11258, District of Delaware.