Mallinckrodt key employee incentive plan draws objection from trustee

By Sarah Lizee

Olympia, Wash., March 24 – Mallinckrodt plc’s motion for approval of a key employee incentive plan drew an objection from Regions 3 and 9 U.S. trustee Andrew R. Vara, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The debtors seek authority to pay $4.8 million in bonuses under a fourth quarter 2020 KEIP and up to $27.7 million in bonuses under a 2021 KEIP.

In the year prior to filing, however, the debtors paid tens of millions of dollars in pre-petition bonuses to the same insiders – with retention bonuses totaling $5.2 million paid to five of the 12 KEIP participants just six weeks prior to the filing of these cases, Vara said.

“The debtors filed their cases in order to address the multi-billion dollar liabilities arising out of more than 3,000 lawsuits alleging that the debtors acted improperly in the manufacture and sale of prescription opioids that have played a role in the national opioid crisis,” the U.S. trustee said.

“However, the proposed KEIP payments are not premised on any metrics that address the opioid liabilities through a plan of reorganization and/or successful emergence from bankruptcy.

“Because no plan of reorganization has been filed, and it is unclear when creditors will receive a distribution, the facts and circumstances of this case do not justify approval of the requested KEIP payments to the insiders.”

Dublin-based Mallinckrodt develops, manufactures, markets and distributes specialty pharmaceutical products and therapies. The company filed Chapter 11 bankruptcy on Oct. 12 under case number 20-12522.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.