Mallinckrodt faces investor revolt over handling opioid crisis
Shareholders of Mallinckrodt, the Dublin-based but US-led drugmaker amid bankruptcy reorganization, urged by leading business advisory firm to vote against some directors in rebuke for his handling of the opioid crisis in the United States and executive compensation. .
Mallinckrodt filed for bankruptcy in Delaware last October as the company was overwhelmed by lawsuits accusing it of deceptively marketing opioids.
The company is pursuing a U.S. court-overseen Chapter 11 reorganization that would set up a $ 1.6 billion trust to resolve opioid-related claims with states, local governments and individuals.
The plan, backed by some creditors and put to broader votes by early September, would see unsecured bondholders take control of the company, with some $ 1.3 billion in debt eliminated and creditors not. guaranteed generals would share $ 150 million in cash.
Existing shareholders should be wiped out by the debt restructuring.
Glass Lewis, an influential shareholder advisory firm on corporate governance, said it recognizes Mallinckrodt’s actions in recent years in responding to the opioid epidemic, with its website providing information on its role in combating opioid abuse and abuse.
“However, ask yourself if the board of directors properly exercised its regulatory oversight role in the years leading up to the US government’s crackdown on the deceptive marketing plans of the opiate makers,” Glass said. Lewis. “This concern is magnified by the relatively limited refresh the board has done since these issues became a topic of global concern in 2017.”
As such, Glass Lewis is calling on investors to vote against the re-election of board members Martin Carroll and Kneeland Youngblood at the group’s annual general meeting in Dublin next month. Both have been members of the Mallinckrodt Governance and Compliance Committees since the company’s launch in New York City in 2013.
Nearly 500,000 people have died from overdoses involving opioids, including prescription and illicit drugs, in the United States over the past 20 years, according to figures from the United States Centers for Disease Control and Prevention . Mallinckrodt was the third opioid maker to seek Chapter 11 bankruptcy protection.
“The company’s legal issues, bankruptcy and loss of stock trader status have had a significant negative impact on the shareholder value and reputation of the company,” said Glass Lewis.
“While it is likely that the board of directors will be reconstituted when the company exits bankruptcy, we believe there are sufficient grounds for shareholders to express their dissatisfaction this year by voting against the aforementioned directors at the time. of the annual meeting. “
Glass Lewis also urged shareholders to vote against the re-election of directors David Carlucci, Mr. Carroll, David Norton and Anne Whitaker, all members of Mallinckrodt’s human resources and compensation committee, due to concerns about compensation practices leaders.
A spokesperson for Mallinckrodt declined to comment on the Glass Lewis report.
The Irish Times reported last week that a standoff between Mallinckrodt and a small group of dissident shareholders, claiming their rights are being stripped in the debt reorganization, is about to be aired in the High Dublin Court later this year.
New York-based asset management firm Buxton Helmsley, which heads an investor group that owns around 5.6% of Mallinckrodt, claimed it was thwarted by Mallinckrodt and the Delaware court as she was looking for a seat at the debt negotiating table. .
Mallinckrodt successfully filed an objection in late 2020 against forming an official committee for existing shareholders, and also obtained a Delaware court order in April that effectively bars Buxton Helmsley, led by Alexander Parker, from taking a certain number of measurements.
These include using one’s actions to call an extraordinary general meeting, proposing resolutions at the next general meeting or initiating legal action without the approval of the US court.
However, Mr Parker said he plans to raise his concerns in the Irish High Court when the drugmaker requests a review to validate the restructuring.