The news that after making only one of nine opioid settlement payments Mallinckrodt may enter a repeat bankruptcy process grabbed headlines last week. If the company reneges on its remaining $1.25 billion of payments, the consequences will be devastating to the individuals, states, and communities still waiting for their portions of this settlement.
This situation highlights the fragility of the entire opioid settlement process. It’s a house of cards, built on a foundation of trust that companies, whose revenues have just been negatively impacted by opioid regulation, will be able to fulfill their payment obligations. It took only six months after payments started flowing for the first potential failure to rear its head.
In the litigation financing world, we often speak about recourse or non-recourse financing and who assumes the risk of non-payment. What’s happening with Mallinckrodt is a prime example of the payment risk associated with opioid settlements and why the right form of litigation financing should be a top consideration for plaintiffs’ counsel and municipalities.
For our clients, RD Legal Funding will assume the risk of non-payment when we purchase the future proceeds of these settlements. In short, if a defendant in the opioid settlement fails to deliver on a portion of the settlement that we purchased, that’s our problem, not yours.
Was the Mallinckrodt potential return to bankruptcy foreseeable? We think so. Next week on our blog we will examine some of the contributing factors that may be impacting Mallinckrodt and other defendants’ ability to fulfill their payments.
The opioid settlement process is complex, lengthy, and risky. Let’s talk about your options for accelerating your payment before this house of cards becomes even more unstable.