By Dietrich Knauth

Drugmaker Mallinckrodt on Tuesday received court approval for a bankruptcy plan that cuts $1 billion from the amount it must pay victims of the opioid crisis, cancels existing equity shares, and trims nearly $2 billion in other debt.

The Ireland-based company reached a relatively swift conclusion to its second Chapter 11, which began on Aug. 28, just 14 months after its previous bankruptcy concluded.

U.S. Bankruptcy Judge John Dorsey approved the company's restructuring plan at a court hearing in Wilmington, Delaware.

Mallinckrodt, which makes both branded and generic drugs, had first filed for bankruptcy in 2020 to address its high debt load, litigation over its allegedly deceptive marketing of highly addictive generic opioids and disputes over its drug pricing.

Despite the previous bankruptcy settlement that resolved those litigation threats and cut $1.5 billion in debt, Mallinckrodt quickly found itself in financial trouble again due to declining sales for its key branded drugs, including Acthar Gel.

Sales of Acthar, used to treat multiple sclerosis and infantile spasms, were down 20% for the first six months of 2023 after the treatment racked up $516 million in 2022.

(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and Bill Berkrot)