A $1.7 Billion Opioid Settlement Is at Risk of Falling Apart

A major US opioid settlement is on the verge of unraveling.

Mallinckrodt Plc, the drugmaker that first began producing morphine and codeine in 1898, owes states, hospitals, tribes, individuals and others hurt by the opioid crisis $200 million by the end of today. The payment is part of a $1.7 billion settlement that the company started paying last summer to exit a bankruptcy that was triggered by the wave of lawsuits it faced.

But Mallinckrodt’s business is sputtering, and some of its lenders, alarmed at how the company is burning through cash, are urging management to renege on the ...