Mallinckrodt files for bankruptcy protection amid litigation

Mallinckrodt Plc filed for bankruptcy protection on Monday, saddled with lawsuits alleging it fueled the U.S. opioid epidemic and after it lost a court battle to avoid paying higher rebates to state Medicaid programs for its top-selling drug.

The company listed both assets and liabilities in the range of $1 billion to $10 billion in a filing with the U.S. Bankruptcy Court for the District Of Delaware. More than 3,000 lawsuits have been filed accusing drug manufacturers of engaging in deceptive marketing that promoted the use of addictive painkillers, fueling an epidemic that since 1999 has resulted in more than 450,000 overdose deaths.

The company had in February said it planned to have its generic drug business file for bankruptcy as part of a tentative $1.6 billion opioid settlement to resolve claims by state attorneys general and U.S. cities and counties. It further warned on Aug. 4 the parent company and other units may also seek bankruptcy protection after a judge allowed the federal government to force it to pay higher rebates to state Medicaid programs for its multiplesclerosis drug H.P. Acthar Gel.

Its per-vial price has risen from about $50 in 2001 to $38,892 in 2019 and it generated 30.1% of the company's net sales last year. The drugmaker said it will implement a restructuring support agreement that would provide for an amended proposed opioid claims settlement and a financial restructuring.

"The company has agreed to pay $260 million over seven years and reset Acthar Gel's Medicaid rebate calculation as of July 1, 2020, such that state Medicaid programs will receive 100% rebates on Acthar Gel Medicaid sales, based on current Acthar Gel pricing," Mallinckrodt said in a statement. During the bankruptcy protection, the company said it aims to resolve opioid-related claims and to reduce its debt by about $1.3 billion, while surviving on cash on hand and cash generated from operations.

Meanwhile, General Motors Co Monday said continued market recovery from the COVID-19 crisis helped its China vehicle sales grow 12% on year in July-September, marking the Detroit automaker's first Chinese quarterly sales growth in two years. The secondbiggest foreign automaker in China by units - after Germany's Volkswagen AG VOWG_p.DE - said on Monday it delivered 771,400 vehicles in China in the third quarter. That followed a 5% fall in the second quarter, when parts of China were still emerging from virusbusting lockdown measures.

GM has a Shanghai-based joint venture with SAIC Motor Corp Ltd 600104.SS making Buick, Chevrolet and Cadillac vehicles. It has another venture, SGMW, with SAIC and Guangxi Automobile Group, producing no-frills mini-vans and which has started manufacturing higher-end cars. Sales rose 26% for cars under its massmarket Buick brand in the third quarter versus the same period a year earlier, while those of premium brand Cadillac jumped 28%, GM said in a statement. Sales of its mass-market Chevrolet marque fell 20%.

Sales of no-frills brand Wuling grew 26%, whereas those of mass-market Baojun vehicles tumbled 19%. "GM's compact models returned to four-cylinder engines and that helped sales growth," said LMC Automotive senior analyst Alan Kang, referring to an attempt to market cleaner but noisier three-cylinder versions. "Cadillac also has a more complete lineup this year."

China's biggest automakers' association expects overall car sales to grow by double digits in July-September versus a year earlier. Makers such as Toyota Motor Corp 7203.T, Honda Motor Co Ltd 7267.T and Geely Automobile Holdings Ltd 0175.HK saw sales jump in the just-finished quarter. GM has seen its China sales suffer in a crowded market and slowing economy. To revive its fortunes, it plans to have electric vehicles (EVs) make up over 40% of new models in the next five years in China, where the government promotes greener cars.

The automaker's Wuling Hong Guang MINI EV, a micro two-door EV with a starting price of 28,800 yuan ($4,200), was China's biggest-selling EV in August. GM's sales fell 15% in 2019 from a year earlier to 3.09 million vehicles. The automaker delivered 3.65 million vehicles in 2018 and 4.04 million in 2017.

Meanwhile, When the pandemic blew a hole in the U.S. labor market last spring, the hope was for a quick return to normal. It's clear that hasn't happened, and with the critical holiday shopping season approaching workers face a new drag on their prospects. Companies appear to be bringing on fewer seasonal workers.

"Hiring is shaping up differently from previous years," said AnnElizabeth Konkel, an economist with the Indeed Hiring Lab, a research group at the job posting site Indeed. Seasonal postings are about 11% below last year, and Konkel said the reasons vary from concerns about future sales, reduced capacity since some stores are closed, and even disruptions in the supply chains that bring goods to market. Along with job posting sites like Indeed, companies like UKG that manage employee work time are seeing the same thing.

The firm noted that among its clients, companies in manufacturing continue to add shifts, while the number of shifts at retailers is flat even as Halloween decorations and Christmas trees pop up in stores.

It's tempting to chalk it up to expectations of weak sales as the pandemic continues. But people have found plenty of ways to spend money even under lockdown. Deloitte in fact estimates holiday sales will be 1% above last year's level.