Mallinckrodt plc announced that it has voluntarily initiated Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware to modify its capital structure, including restructuring portions of its debt, and resolve several billion dollars of otherwise unmanageable potential legal liabilities. Mallinckrodt and all of its subsidiaries are continuing to operate and supply customers and patients with products as normal.

The entities that filed Chapter 11 petitions include Mallinckrodt plc, substantially all of its U.S. subsidiaries, including its specialty generics-focused subsidiaries (collectively, "Specialty Generics") and specialty brands-related subsidiaries (collectively, "Specialty Brands"), and certain of its international subsidiaries.

The Company intends to use the Chapter 11 process to provide a fair, orderly, efficient and legally binding mechanism to implement a restructuring support agreement ("RSA") that, among other things, provides for an amended proposed opioid claims settlement and a financial restructuring that would:

• Reduce the Company's total debt by approximately $1.3 billion, improving the Company's financial position and better positioning it for long-term growth;
• Resolve opioid-related claims against the Company, its subsidiaries and related entities; and
• Resolve various Acthar Gel-related matters, including the CMS Medicaid rebate dispute, an associated False Claims Act ("FCA") lawsuit and an FCA lawsuit relating to Acthar's previous owner's interactions with an independent charitable foundation.

Taken together, these actions are intended to enable the Company to move forward with its vision to become an innovation-driven biopharmaceutical company meeting the needs of underserved patients with severe and critical conditions.

Mark Trudeau, President and Chief Executive Officer of Mallinckrodt, said, "After many months of deliberation, negotiation and consideration of alternatives, Mallinckrodt's management and Board of Directors determined that implementing a Chapter 11 restructuring provides the best opportunity to maximize the value of the enterprise and position the Company for the future in light of the current challenges it faces. The actions we are taking are an important step forward for Mallinckrodt and our patients, employees, customers, suppliers and other partners. We have worked diligently over the last several months to evaluate all available options to achieve a comprehensive resolution to the significant litigation and debt issues overhanging our business. Having entered our restructuring support agreement and reached agreements in principle with a key group of opioid plaintiffs, other governmental parties and our guaranteed unsecured noteholders, we are beginning this process in a highly organized manner. We are now on a clear path to eliminating legal uncertainties, maximizing enterprise value, strengthening our balance sheet and moving ahead with our strategic plans. At the same time, we remain committed to improving health outcomes and developing and bringing to market therapies for patients with severe and critical conditions."

Trudeau continued, "We are grateful to our employees for their continued commitment to our customers and the patients we serve. We also thank our suppliers and business partners for their support as we continue working together to improve the lives of patients."

Overview of Key RSA Terms

In connection with the Chapter 11 filing, the Company has entered into an RSA that provides for a financial restructuring designed to strengthen the Company's balance sheet and reduce its total debt by approximately $1.3 billion, improving the Company's financial position and allowing the Company to continue driving its strategic priorities and investing in the business to develop and commercialize therapies to improve health outcomes.

Parties to the RSA include:

• Holders of approximately 84% of the Company's guaranteed unsecured notes;
• 50 states and territories; and
• The court-appointed plaintiffs' executive committee representing the interests of thousands of plaintiffs in the opioid multidistrict litigation ("Opioid MDL"), which has agreed to recommend that the more than 1,000 counties, municipalities (including cities, towns and villages), Native American tribes and other opioid claimants in the Opioid MDL support the RSA.

Under the terms of the RSA, at the end of the court-supervised process:

• All allowed First Lien Credit Agreement Claims, First Lien Note Claims and Second Lien Note Claims are expected to be reinstated at existing rates and maturities;
• Holders of allowed Guaranteed Unsecured Note Claims are expected to receive their pro rata share of $375 million of new secured second lien notes due seven years after emergence and 100% of New Mallinckrodt Ordinary Shares, subject to dilution by the warrants described below and certain other equity;
• Trade creditors and holders of allowed General Unsecured Claims are expected to share in
• $150 million in cash; and
• Equity holders and non-guaranteed unsecured noteholders are expected to receive no recovery.

Amended Proposed Opioid Settlement

The Company has reached an agreement in principle on the terms of an amended proposed settlement that would resolve opioid-related claims against Mallinckrodt and its subsidiaries and eliminate billions of dollars in alleged liabilities. The amended proposed settlement is supported by a broad array of opioid plaintiffs as detailed above.

Under the terms of the amended proposed settlement, which would become effective upon Mallinckrodt's emergence from the Chapter 11 process, subject to court approval and other conditions:

• Opioid claims would be channeled to one or more trusts, which would receive $1.6 billion in structured payments.
• $450 million would be received upon the Company's emergence from Chapter 11;
• $200 million would be received on each of the first and second anniversaries of emergence; and
• $150 million would be received on each of the third through seventh anniversaries of emergence with a one-year prepayment option at a discount for all but the first payment.
• Opioid claimants would also receive warrants for approximately 19.99% of the Company's fully diluted outstanding shares, including after giving effect to the exercise of the warrants, exercisable at a strike price reflecting an aggregate equity value of $1.551 billion.
• Upon commencing the Chapter 11 filing, the Company will comply with an agreed-upon operating injunction with respect to the operation of its opioid business.