Mallinckrodt Public Ltd Company

JurisdictionIreland
JudgeMr. Justice Quinn
Judgment Date27 April 2022
Neutral Citation[2022] IEHC 270
CourtHigh Court
Docket NumberRECORD NO. 2022/25COS
In the Matter of Mallinckrodt Public Limited Company

and

In the Matter of Part 10 of the Companies Act 2014

[2022] IEHC 270

RECORD NO. 2022/25COS

THE HIGH COURT

COURT 16

APPEARANCES

FOR THE DIRECTORS OF MALLINCKRODT PLC: Mr. Brian Kennedy SC, Mr. Stephen Walsh Bl

INSTRUCTED BY: ARTHUR COX SOLICITORS

FOR MR. MICHAEL McATEER: Ms. Kelley Smith SC, Mr. John Lavelle Bl

INSTRUCTED BY: A&L GOODBODY SOLICITORS

FOR THE FIRST LIEN AGENT: Ms. Barbara Galvin, Eversheds

FOR THE GOVERNMENTAL PLAINTIFF AD HOC COMMITTEE: Mr. Ruairi Rynn, William Fry

FOR THE AD HOC FIRST LIEN LENDER GROUP: Mr. Michael Murphy, McCann Fitzgerald

FOR AD HOC COMMITTEE OF GUARANTEED UNSECURED NOTEHOLDERS: Mr. Declan Murphy Bl

INSTRUCTED BY: MATHESON

FOR AVON HOLDINGS AND ATTESTOR: Mr. Lyndon Maccann SC

INSTRUCTED BY: DENTONS IRELAND

FOR THE REVENUE COMMISSIONERS: Mr. Cunningham

INSTRUCTED BY: REVENUE SOLICITORS

FOR THE US DEPT. OF JUSTICE: Mr. Niall Ó Huiginn Bl

INSTRUCTED BY: WALKERS SOLICITORS

FOR THE SECOND LIEN NOTEHOLDERS: Mr. Gavin Simons, Amoss

FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS: Mr. Robin McDonnell, Maples

FOR THE OFFICIAL COMMITTEE OF OPIOID RELATED CREDITORS: Ms. Judith Riordan, Mason Hayes & Curran

FOR THE GUARANTEED UNSECURED NOTES INDENTURE TRUSTEE: Mr. Ciaran Lewis SC

INSTRUCTED BY: DILLON EUSTACE

EX TEMPORE JUDGMENT DELIVERED BY Mr. Justice Quinn ON WEDNESDAY, 27TH APRIL 2022

PROCEEDINGS COMMENCED ON WEDNESDAY, 27TH APRIL 2022, AS FOLLOWS

Mr. Justice Quinn DELIVERED JUDGMENT EX TEMPORE, AS FOLLOWS

1

MR. JUSTICE QUINN: This is my judgment on the application of the Examiner, Mr. McAteer, pursuant to section 541(3) of the Companies Act 2014 for confirmation of his proposals for a scheme of arrangement between Mallinckrodt plc and its members and creditors.

2

On the 14th of February, the directors of the Company petitioned for the appointment of an examiner and the Court appointed Mr. McAteer Interim Examiner. The petition was heard on the 28th of February and, on that occasion, the appointment of Mr. McAteer was confirmed.

3

On the 22nd of March, I delivered a reserved judgment summarising the reasons why the Court was satisfied to appoint the Examiner. No party had objected to the appointment of the Examiner or to the jurisdiction of the Court in respect of these proceedings. I do not propose to repeat any of the detail contained in that judgment, but in it I considered the financial, legal and trading background to the presentation of the petition, and I referred to the proceedings in relation to the Company and approximately 60 of its subsidiaries which had been commenced in the Delaware Bankruptcy Court pursuant to Chapter 11 of the US Bankruptcy Court on the 12th of October 2020. Those proceedings related not only to the Company, which is the subject of this application, but also its subsidiaries trading in several jurisdictions.

4

I noted in that judgment that on the 3rd of February 2022, Mr. Justice Dorsey had delivered his ruling, finding that the Plan before him, which was the Fourth Amended Plan of Reorganisation for the Company and its subsidiaries, satisfied the requirements of the US Bankruptcy Code. He made that finding at the conclusion of a hearing which lasted for 16 days, at which witnesses gave evidence and experts gave evidence, and I will be referring in a little more detail to Judge Dorsey's findings later.

5

On the 2nd of March, the Bankruptcy Court issued the order confirming the Plan, with what were described in that order as “Technical Modifications” from the Fourth Amended Plan, and the order was given immediate effect.

6

A number of appeals are pending from the rulings of Judge Dorsey, but a stay on orders that he made has been refused. An appeal was brought against his refusal of a stay in relation to the Confirmation Order and that appeal in relation to the refusal of the stay has been refused by the District Court in Delaware.

7

The Plan before Judge Dorsey identified no less than 23 conditions precedent to the Effective Date of the Plan, and I will be returning to those conditions in more detail. The important point at the outset to note is Condition 11, which is to the effect that, as a precondition to the coming into effect of the Plan, that the High Court of Ireland should make a confirmation order in respect of a scheme proposed by an examiner pursuant to Part 10 of the Companies Act 2014, such scheme to be based on and consistent, in all respects, with the Plan and substantially in the form of a draft scheme of arrangement, which was included in the Plan Supplement and was annexed to the petition before this Court for the appointment of an examiner. It was also a condition that that scheme should have become effective in accordance with its terms or would become effective concurrently with the effectiveness of the Plan.

8

Correspondingly, the Examiner's proposals for a scheme now before this Court provide at section 5 that the Scheme will take effect and become binding on the effective Date of the Plan. The Effective Date for the scheme is defined in the proposals before me as the time and date when all of the conditions precedent specified in Article VIII of the Plan have been satisfied or waived.

The Act
9

The application is made pursuant to section 541 of the Act and I have been referred to the key elements of that section, which are that the jurisdiction of this Court to confirm a proposal for a scheme of arrangement arises where

“…at least one class of creditors whose interests or claims would be impaired by implementation of the proposals has accepted the proposals, and.

(b) the court is satisfied that—

  • (i) the proposals are fair and equitable in relation to any class of members or creditors that has not accepted the proposals and whose interests or claims would be impaired by implementation, and

  • (ii) the proposals are not unfairly prejudicial to the interests of any interested party.”

10

Section 543 governs objections to confirmation by the Court of proposals. It identifies grounds such as material irregularity or acceptance of proposals by improper means and, importantly, a ground, namely, that “the proposals unfairly prejudice the interests of the objector.”

11

Section 543 has not been invoked by any party in the hearing before me. Nonetheless, the onus is on the Examiner to satisfy the conditions identified in section 541(3), namely, that the Scheme is fair and equitable and not unfairly prejudicial to the interests of any party.

Representation
12

Before I turn to the substance of the proposals, it is relevant to note that of those who participated at the confirmation hearing yesterday, only one party objected to or opposed confirmation of the proposals. That was Avon Holdings LLC and Attestor Limited, which are related companies represented by Mr. MacCann S.C.. I refer to these parties as Acthar Claimants. One party expressed neutrality, namely the Guaranteed Unsecured Note Indenture Trustee.

13

All of the other parties who participated indicated their support for confirmation of the Scheme. They included the Company, the Revenue Commissioners, the holders of Guaranteed Unsecured Notes, the holders of First Lien Term Loans, the First Lien Collateral Agent, the Second Lien Senior Secured Notes, the Official Committee of Unsecured Creditors, the Official Committee of Opioid Related Claimants and the Future Claims Representative. Counsel for the Federal Acthar Claimants indicated that it was not opposing the confirmation of the Scheme.

14

Mr. Rynn, solicitor, appeared on behalf of the Governmental Plaintiff Ad Hoc Committee. This Committee comprises seven US states and the Plaintiffs' Executive Committee. This party had on previous occasions in this Court indicated its support for confirmation of the proposals. It has at all times indicated its support for the Chapter 11 Plan, for the proposals before this Court and for the restructuring as a whole, and it did not indicate in the hearing yesterday that it was withdrawing this support. Its only objection was to the hearing proceeding yesterday in the light of unresolved issues which it described concerning its part in the satisfaction of certain of the conditions precedent. I will come back to that issue in more detail when I am dealing with the materiality of the conditions. But this party did not voice opposition to the confirmation of the proposals.

The Acthar Claimants
15

Mr. MacCann on behalf of Avon and Attestor, who I will refer to as the Acthar Claimants, indicated that his clients were owed almost $3 billion, of which $2.6 billion related to pre-petition claims and a sum of $265 million represented post-petition or “administrative claims” as they are described under the Plan. He indicated that there were three of the rulings made by Judge Dorsey in the course of the Chapter 11 proceedings to which he had objected and in respect of which he has filed appeals.

16

Firstly, Judge Dorsey had denied the admission of the pre-petition claim that was essentially a proof of debt claim. Secondly, Judge Dorsey denied the admission of administrative claims, being claims arising after the presentation of the Chapter 11 petition in August 2020. Thirdly, the Acthar Claimants have lodged an appeal against the order confirming the Plan. Mr. MacCann did not invite this Court to re visit those rulings in themselves. He has lodged his appeals and has fairly said that he will be pursuing them in the relevant appeal courts in the ordinary course under US law, but he says the following: That with the exception of the specific treatment of shareholders and of preferential creditors, the proposals in their treatment of all other creditors is entirely referential; that although the Scheme states that certain creditors are not impaired by it and other creditors are impaired by it, that all of the creditors,...

To continue reading

Request your trial
1 cases
  • MAC Interiors Ltd v Companies Act 2014
    • Ireland
    • High Court
    • 9 October 2023
    ...rights based approach to the question. 121 . The Examiner referred to the ex tempore judgment of this court in Re Mallinckrodt Limited [2022] IEHC 270, confirming proposals for a scheme of arrangement. This court observed in that case as follows:- “It is not unusual in a scheme of arrangeme......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT