Opioid Manufacturer Mallinckrodt (MNK) Files For Bankruptcy
Investor alert! Pharmaceutical company and opioid producer Mallinckrodt PLC (NYSE: MNK) has just filed for Chapter 11 bankruptcy protection. Soreide Law Group is reviewing possible claims against financial advisors and securities brokers who might have advised clients to purchase shares of Mallinckrodt. Here’s more on what led to the bankruptcy filing and what you could do if you invested in MNK.
Mallinckrodt Faces Crippling Number Of Lawsuits Alleging Deceptive Marketing Practices, Illegal Promotions
Mallinckrodt is a major producer of opioids in the United States. In fact, Mallinckrodt has made more opioids than other United States companies, which is why it faces serious legal pressures as the country tries to get a handle on the opioid epidemic while holding bad actors accountable. Critically, Mallinckrodt is subject of more than 3,000 lawsuits by those who allege that the company deceptively marketed products and illegally promoted pain killers. With a Chapter 11 bankruptcy filing, Mallinckrodt becomes the third major manufacturer of opioids to seek bankruptcy protection in the last 18 months.
Mallinckrodt Announces Bankruptcy Filing In Light Of Legal Uncertainties
Evidently, Mallinckrodt announced on October 12, 2020 that it filed for Chapter 11 bankruptcy partially to resolve mounting legal issues. Creditors and claimants agreed on a restructuring plan that transfers ownership of the company to bondholders and which sets aside a whopping $1,600,000,000.00 to resolve opioid litigation. CEO Mark Trudeau stated that the company is on a path to “eliminating legal uncertainties” and “strengthening our balance sheet.”
Notably, a proposed settlement involves the company funding a trust to pay claimants during bankruptcy. When the company reemerges from bankruptcy, victims are expected to receive warrants enabling them to buy a 20% share in the company. However, the fallout may be devastating for current equity shareholders who are not expected to receive anything. Shares of MNK are down approximately 96% YTD as of October 16, 2020. Notably, those who purchased shares in 2015 have seen catastrophic losses.
In addition to dealing with opioid-related lawsuits, the company also plans to designate $260,000,000.00 towards resolving a government investigation relating to its pricing of Acthar Gel – a multiple-sclerosis drug. Allegedly, Mallinckrodt hiked up per-vial prices to astronomical levels between 2001 to 2019.
Financial Advisors Might Have Unreasonably Recommended MNK
Financial advisors and securities brokers are supposed to take investors’ suitability information into account before making recommendations. It is possible that some of these professionals did not carefully consider the suitability of MNK for clients’ investment portfolios. Particularly, an investment in MNK is not diversified like a mutual fund. For this reason, it could have been unsuitable for investors to invest a significant portion of their assets in MNK. Critically, investors who have placed significant funds in MNK might have seen drastic declines in the value of their portfolios.
Also, financial advisors and securities brokers could have been cognizant of the opioid epidemic and legal actions facing opioid manufacturers – particularly Mallinckrodt – at the time of recommending MNK. Given the issues facing the company from a legal angle, it is possible that MNK contained too much risks for some investors. It is also possible that financial advisors or securities brokers misrepresented risks or concealed risks relating to MNK.
Losses On MNK?
Have you experienced losses because of purchasing MNK from your securities broker or financial advisor? If so, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represents clients on a contingency fee basis and advances all costs. The law firm has recovered millions of dollars for clients who have suffered losses due to misconduct of brokers and financial advisors.