Mallinckrodt eyes cash collateral to make term loan prepayment

By Sarah Lizee

Olympia, Wash., Feb. 18 – Mallinckrodt plc is seeking court approval for debtors Mallinckrodt International Finance SA and Mallinckrodt CB LLC to use cash collateral to make a $114 million mandatory prepayment of principal on their term loans, according to a motion filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

The debtors said they believe that making the mandatory prepayment is in the best interest of their estates.

“The restructuring support agreement provides for the reinstatement of the term loans as part of the debtors’ contemplated plan of reorganization,” the motion said.

“Making the mandatory prepayment will avoid potentially creating an argument that a default or an event of default has occurred under the credit agreement as a result of the non-payment, eliminate the possibility that the debtors might be required to pay default interest on any unpaid amount of the mandatory prepayment, and best position the debtors in any litigation over reinstatement.”

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.

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