We advised an ad hoc group of first-lien noteholders

Davis Polk advised an ad hoc group of holders of first-lien notes due 2025 in connection with the chapter 11 restructuring of Mallinckrodt plc and certain of its subsidiaries (collectively, “Mallinckrodt”). Certain members of the ad hoc group are also lenders under the DIP term loan facility. On October 10, 2023, the bankruptcy court confirmed Mallinckrodt’s plan of reorganization. On November 14, 2023, Mallinckrodt emerged from bankruptcy.

Pursuant to the plan, Mallinckrodt emerged with $1.65 billion of first-lien takeback debt, consisting of approximately $229.4 million of first-out takeback term loans, approximately $642 million of second-out takeback term loans and approximately $778.6 million of takeback notes. Holders of the DIP claims received a $50.6 million cash payment and the first-out takeback term loans. Holders of the prepetition first-lien term debt received takeback debt in the form of either second-out takeback term loans or takeback notes pursuant to their election and 92.3% of Mallinckrodt’s reorganized equity (subject to certain dilution). Holders of the prepetition second-lien debt received 7.7% of Mallinckrodt’s reorganized equity (subject to certain dilution).

Mallinckrodt is a global business consisting of multiple wholly owned subsidiaries that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. The company’s specialty brands reportable segment’s areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, hepatology, nephrology, pulmonology, ophthalmology and oncology; immunotherapy and neonatal respiratory critical care therapies; analgesics; cultured skin substitutes; and gastrointestinal products. The company’s specialty generics reportable segment includes specialty generic drugs and active pharmaceutical ingredients.

The Davis Polk restructuring team included partner Darren S. Klein, counsel Jon Finelli and Aryeh Ethan Falk and associates Helen Zhang, James Nirappel and Lily Zhou. The corporate team included counsel Jacob S. Kleinman. The tax team included partner Corey M. Goodman and associate Tyler Scheiner. All members of the Davis Polk team are located in the New York office.