In re MALLINCKRODT PLC,
- Summarized by Michael Myers , Ballard Spahr LLP
- 1 year 10 months ago
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- 23-1111 (3rd Circuit, Apr 25,2024) Published
- Tag(s):
-
- Ruling:
- The Third Circuit upheld the lower courts' rulings that creditor's claim for royalties was discharged in Mallinckrodt's bankruptcy.
- Procedural context:
- Creditor Sanofi appealed decisions of the Delaware bankruptcy court and U.S. District holding that its claim for royalties had been discharged in Mallinckrodt's bankruptcy.
- Facts:
- Sanofi had sold Mallinckrodt the right to Acthar Gel outright for $100,000 plus royalties of 1% of net sales over $10 million. By 2019, sales of Acthar Gel hit almost one billion dollars, making the royalties extremely valuable. Mallinckrodt filed bankruptcy in 2020 and confirmed its chapter 11 plan of reorganization in 2021. Sanofi argued that its royalties were too "unknown" to be a claim and could not be discharged. The courts held that Sanofi did have a claim, and that the claim was merely contingent and unliquidated. And Sanofi did not license the drug; it had sold it outright. So Sanofi did not have an executory contract with ongoing obligations. As a result, Mallinckrodt could discharge Sanofi's claim.
- Judge(s):
- BIBAS, PORTER, and FREEMAN
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