| Item
2.04. | Triggering Events that
Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. |
As previously
disclosed, the Board of Directors (the “Board”) of Mallinckrodt plc (the “Company”) is engaged in discussions
with various stakeholders, including parties holding substantial positions across the Company’s capital structure and representatives
of the Opioid Master Disbursement Trust II (the “Trust”). The Board is actively evaluating the Company’s capital
needs in light of its obligations under its opioid settlement and its long-term debt, and is considering options, including transactions
that have been proposed by holders of various series of the Company’s indebtedness and other Company stakeholders, as well as the
viewpoints of various parties in interest.
As
the Board continues to evaluate alternatives, the Company determined not to make an approximately $17 million interest payment due
on June 20, 2023 (the “Term Loan Interest Payment”) to the holders of the Company’s First Lien Senior Secured Term
Loans pursuant to the Credit Agreement (as defined below). The Credit Agreement was originally entered into on June 16,
2022 by and among the Company, Mallinckrodt International Finance S.A., Mallinckrodt CB LLC, the lenders party thereto from time
to time, Acquiom Agency Services LLC and Seaport Loan Products LLC, as co-administrative agents, and Deutsche Bank AG New York Branch,
as collateral agent (the “Credit Agreement”), and provides for first lien senior secured term loan facilities with an aggregate
principal amount of approximately $1,728 million (collectively, the “First Lien Senior Secured Term Loans”).
The
failure to make the Term Loan Interest Payment will constitute an event of default under the Credit Agreement if
such failure continues unremedied for a period of five business days. As a result of an occurrence of an event of default under the Credit
Agreement, during the continuance of such event, the administrative agent under the Credit Agreement, at the request of lenders holding
more than 50% of the outstanding amount of all loans under the Credit Agreement, has the right to cause the acceleration of the Term Loans
then outstanding in whole or in part. Such failure to make the Term Loan Interest Payment under the guarantee thereof will, if it continues
beyond the above-described grace period set forth in the Credit Agreement, constitute an event of default under that certain ABL Credit
Agreement, dated as of June 16, 2022 (the “ABL Credit Agreement”), among ST US AR Finance LLC, the lenders party thereto,
the L/C Issuers (as defined in the ABL Credit Agreement) party thereto and Barclays Bank PLC, as administrative agent and collateral agent,
because the Originators (as defined in the ABL Credit Agreement) and the Servicer (as defined in the ABL Credit Agreement) are guarantors
under the Credit Agreement. In addition, the acceleration of the obligations under the Credit Agreement would cause an event of default
under certain other indebtedness of Company and its subsidiaries and its opioid settlement obligations that would permit the holders of
such indebtedness or the Trust to accelerate the applicable obligations.
The
determination not to make the Term Loan Interest Payment reflects that the Company continues
to analyze its situation and engage with various stakeholders. There can be no assurance of the outcome of this process, including whether
or not the Company may make a filing in the near term or later under the U.S. Bankruptcy Code or analogous foreign bankruptcy or insolvency
laws.
Cautionary Statements Related to Forward-Looking Statements
Statements in this Current Report that are not
strictly historical, including statements regarding the Board’s ongoing evaluation and consideration of alternatives and related
actions and discussions, are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act
of 1995, and involve a number of risks and uncertainties.
There are a number of important factors that could
cause actual events to differ materially from those suggested or indicated by such forward-looking statements and you should not place
undue reliance on any such forward-looking statements. These factors include risks and uncertainties related to, among other things: changes
in the Company’s business strategy and performance; the Company’s ability to access the capital markets now or in the future;
the liquidity, results of operations and businesses of the Company and its subsidiaries; the effects of the Company’s determination
not to make certain interest payments due to certain of its creditors; the possibility that the Company and/or certain of its subsidiaries
voluntarily initiate proceedings under Chapter 11 of the U.S. Bankruptcy Code or foreign bankruptcy or insolvency laws and the potential
effects of the initiation of such proceedings and the resulting bankruptcy or insolvency process on the Company’s liquidity, results
of operations and business; governmental investigations and inquiries, regulatory actions and lawsuits; actions taken by third parties,
including the Company’s creditors, the Trust and other stakeholders; court actions; the Company’s ability to achieve expected
benefits from its prior restructuring activities; the Company’s substantial indebtedness, its ability to generate sufficient cash
to reduce its indebtedness and its potential need and ability to incur further indebtedness; the Company’s ability to generate sufficient
cash to service indebtedness; restrictions on the Company’s operations contained in the agreements governing the Company’s
indebtedness; the impact of Irish laws; and the risks, uncertainties and factors described in the “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K
for the fiscal year ended December 30, 2022 and the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2023, as filed with the SEC and available on the Company’s website at http://www.mallinckrodt.com and http://www.sec.gov.
The forward-looking statements made herein speak
only as of the date hereof and the Company does not assume any obligation to update or revise any forward-looking statement, whether as
a result of new information, future events and developments or otherwise, except as required by law.