Mallinckrodt

Mallinckrodt's two bankruptcies (2020, 2023) demonstrated how opioid liability could destroy pharmaceutical companies years after the conduct occurred. The company was one of the largest manufacturers of generic opioids in America; litigation claims from states, cities, and tribal nations exceeded any realistic ability to pay. Mallinckrodt became a case study in how mass tort liability can create structural nonviability. The mechanism failure was liability accumulation without adequate reserves. Mallinckrodt manufactured opioids legally but faces claims that its distribution practices fueled addiction. The company couldn't predict the scale of eventual liability; no reserves were adequate. When opioid litigation consolidated, Mallinckrodt faced billions in claims against a company worth hundreds of millions. The second bankruptcy was triggered by disputes over the first bankruptcy's settlement payments. Mallinckrodt is attempting to emerge from the second restructuring as a smaller, opioid-free company, but the liabilities continue to constrain operations. The company illustrates how entire business lines can become toxic—literally and legally—when externalities eventually become liabilities.