Fresh-Start Accounting (Tables)

12 Months Ended

Nov. 14, 2023

Jun. 16, 2022

Dec. 27, 2024

Reorganizations [Abstract]

Enterprise Value Reconciliation

The following table reconciles the enterprise value to the implied fair value of the Successor's equity as of the 2023 Effective Date:

Enterprise value	$	2,950.0
Plus: Non-operating assets, net (1)	290.0
Less: Fair value of debt	(1,882.7)
Less: Fair value of Acthar Gel-Related Settlement and Terlivaz contingent value rights	(162.5)
Successor equity value	$	1,194.8

(1)Represents non-operating assets and liabilities which were excluded from the enterprise value as put forth in the disclosure statement as there were no cash projections associated with these net assets.

Upon the application of fresh-start accounting, the Company allocated the reorganization value to its individual assets based on their estimated fair values. Reorganization value represents the fair value of the Successor’s assets before considering liabilities.

The following table reconciles the Company's enterprise value to its reorganization value as of the 2023 Effective Date:

Enterprise value	$	2,950.0
Plus: Non-operating assets, net	290.0
Plus: Current liabilities (excluding debt or debt-like items) (1)	404.8
Plus: Other non-current liabilities (excluding debt or debt-like items) (2)	172.1
Reorganization value of Successor assets	$	3,816.9

The following table reconciles the enterprise value to the implied fair value of the Company's equity as of the 2020 Effective Date:

Enterprise value	$	5,223.0
Plus: Enterprise value adjustments (1)	197.0
Adjusted enterprise value	5,420.0
Plus: Cash and cash equivalents	297.9
Plus: Non-operating assets, net (2)	178.7
Less: Fair value of debt	(3,067.2)
Less: Fair value of Opioid-Related Litigation Settlement, Acthar Gel-Related Settlement, StrataGraft PRV proceeds and Terlivaz contingent value rights	(625.8)
Equity value	$	2,203.6

(1)Represents incremental tax benefits not contemplated in the projections utilized in the disclosure statement.

(2)Represents non-operating assets and liabilities which were excluded from the enterprise value as put forth in the disclosure statement as there were no cash projections associated with these net assets.

Upon the application of fresh-start accounting, the Company allocated the reorganization value to its individual assets based on their estimated fair values. Reorganization value represents the fair value of the Company’s assets before considering liabilities.

The following table reconciles the Company's enterprise value to its reorganization value as of the 2020 Effective Date:

Adjusted enterprise value	$	5,420.0
Plus: Cash and cash equivalents	297.9
Plus: Non-operating assets, net	178.7
Plus: Current liabilities (excluding debt or debt-like items)	522.5
Plus: Other non-current liabilities (excluding debt or debt-like items)	183.2
Reorganization value of assets	$	6,602.3

Fresh-Start Four Column Balance Sheet

The four-column consolidated balance sheet as of November 14, 2023 is as follows:

	Predecessor		Reorganization Adjustments			Fresh-Start Adjustments			Successor
Assets
Current Assets:
Cash and cash equivalents	$	314.1	$	(127.3)	(a)	$	—		$	186.8
Accounts receivable, less allowance for doubtful accounts	467.7		—			—			467.7
Inventories	778.7		—			257.6		(o)	1,036.3
Prepaid expenses and other current assets	149.3		6.4		(b)	(0.7)		(p)	155.0
Total current assets	1,709.8		(120.9)			256.9			1,845.8
Property, plant and equipment, net	468.6		—			(150.2)		(q)	318.4
Intangible assets, net	2,258.3		—			(1,633.7)		(r)	624.6
Deferred income taxes	—		586.6		(c)	208.5		(s)	795.1
Other assets	222.9		(2.4)		(d)	12.5		(t)	233.0
Total Assets	$	4,659.6	$	463.3		$	(1,306.0)		$	3,816.9
Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt	$	378.7	$	(370.0)	(e)	$	—		$	8.7
Accounts payable	93.2		(19.4)		(f)	—			73.8
Accrued payroll and payroll-related costs	81.6		—			—			81.6
Accrued interest	32.2		(31.5)		(g)	—			0.7
Income taxes payable	2.7		—			—			2.7
Accrued and other current liabilities	222.1		31.6		(h)	(0.1)		(u)	253.6
Acthar Gel-Related Settlement	—		21.4		(i)	—			21.4
Total current liabilities	810.5		(367.9)			(0.1)			442.5
Long-term debt	—		1,858.9		(e)	—			1,858.9
Pension and postretirement benefits	39.4		—			—			39.4
Environmental liabilities	34.6		—			—			34.6
Deferred income taxes	1.3		—			(1.3)		(v)	—
Other income tax liabilities	19.6		—			—			19.6
Other liabilities	65.9		7.5		(j)	27.6		(w)	101.0
Acthar Gel-Related Settlement	—		214.7		(i)	(88.6)		(x)	126.1
Liabilities subject to compromise	4,932.1		(4,932.1)		(k)	—			—
Total Liabilities	5,903.4		(3,218.9)			(62.4)			2,622.1
Shareholders' Equity:
Predecessor ordinary shares	0.1		(0.1)		(l)	—			—
Successor ordinary shares	—		0.2		(l)	—			0.2
Predecessor ordinary shares held in treasury	(0.1)		0.1		(l)	—			—
Predecessor additional paid-in capital	2,199.9		(2,199.9)		(l)	—			—
Successor additional paid-in capital	—		1,194.6		(l)	—			1,194.6
Predecessor accumulated other comprehensive income	10.4		0.7		(m)	(11.1)		(y)	—
Retained (deficit) earnings	(3,454.1)		4,686.6		(n)	(1,232.5)		(z)	—
Total Shareholders' Equity	(1,243.8)		3,682.2			(1,243.6)			1,194.8
Total Liabilities and Shareholders' Equity	$	4,659.6	$	463.3		$	(1,306.0)		$	3,816.9

The four-column consolidated balance sheet as of June 16, 2022 was as follows:

	Predecessor		Reorganization Adjustments			Fresh-Start Adjustments			Successor (1)
Assets
Current Assets:
Cash and cash equivalents	$	1,392.6	$	(1,094.7)	(a)	$	—		$	297.9
Accounts receivable, less allowance for doubtful accounts	387.4		—			—			387.4
Inventories	375.2		—			851.8		(q)	1,227.0
Prepaid expenses and other current assets	322.6		75.3		(b)	(58.3)		(r)	339.6
Current asset held for sale	—		—			100.0		(j)	100.0
Total current assets	2,477.8		(1,019.4)			893.5			2,351.9
Property, plant and equipment, net	748.6		—			(299.2)		(s)	449.4
Intangible assets, net	5,166.6		—			(2,014.4)		(t)	3,152.2
Deferred income taxes	—		—			453.4		(l)	453.4
Other assets	222.8		(3.9)		(c)	(23.5)		(u)	195.4
Total Assets	$	8,615.8	$	(1,023.3)		$	(990.2)		$	6,602.3
Liabilities and Shareholders' Equity
Current Liabilities:
Current maturities of long-term debt	$	1,389.9	$	(1,355.2)	(d)	$	—		$	34.7
Accounts payable	156.4		(53.8)		(e)	—			102.6
Accrued payroll and payroll-related costs	71.4		—			—			71.4
Accrued interest	20.8		(13.0)		(f)	—			7.8
Acthar Gel-Related Settlement	—		16.5		(g)	—			16.5
Opioid-Related Litigation Settlement	—		200.0		(h)	—			200.0
Accrued and other current liabilities	296.1		50.8		(i)	(6.1)		(v)	340.8
Current liability held for sale	—		35.0		(j)	—			35.0
Total current liabilities	1,934.6		(1,119.7)			(6.1)			808.8
Long-term debt	—		3,050.9		(d)	(18.4)		(w)	3,032.5
Acthar Gel-Related Settlement	—		63.2		(g)	—			63.2
Opioid-Related Litigation Settlement liability	—		304.3		(h)	—			304.3
Pension and postretirement benefits	27.6		27.2		(k)	—			54.8
Environmental liabilities	37.1		—			—			37.1
Deferred income taxes	20.4		102.7		(l)	(121.7)		(l)	1.4
Other income tax liabilities	75.9		—			(61.9)		(x)	14.0
Other liabilities	68.6		23.6		(m)	(9.6)		(v)	82.6
Liabilities subject to compromise	6,402.7		(6,402.7)		(n)	—			—
Total Liabilities	8,566.9		(3,950.5)			(217.7)			4,398.7
Shareholders' Equity:
Predecessor preferred shares	—		—			—			—
Predecessor ordinary A shares	—		—			—			—
Predecessor ordinary shares	18.9		(18.9)		(o)	—			—
Successor ordinary shares	—		0.1		(o)	—			0.1
Predecessor ordinary shares held in treasury	(1,616.1)		1,616.1		(o)	—			—
Predecessor additional paid-in capital	5,599.5		(5,599.5)		(o)	—			—
Successor additional paid-in capital	—		2,203.5		(o)	—			2,203.5
Predecessor accumulated other comprehensive loss	(9.9)		—			9.9		(y)	—
Retained (deficit) earnings	(3,943.5)		4,725.9		(p)	(782.4)		(z)	—
Total Shareholders' Equity	48.9		2,927.2			(772.5)			2,203.6
Total Liabilities and Shareholders' Equity	$	8,615.8	$	(1,023.3)		$	(990.2)		$	6,602.3

(1)The term Successor was used to illustrate the four-column consolidated balance sheet as of the 2020 Effective Date. Upon adoption of fresh-start accounting on the 2023 Effective Date, all balances in this four-column consolidated balance sheet became Predecessor period balances.

Reorganization Adjustments, Cash and Cash Equivalents

The table below reflects the sources and uses of cash on the 2023 Effective Date:

Uses:
Payment of professional fees	$	19.4
Payment to fund professional fees escrow (prepaid and other current assets restricted cash)	24.0
Payment of costs, fees and expenses related to exit-financing activities and accrued and unpaid interest on certain pre-emergence debt	33.3
Payment of cash sweep	50.6
Total Uses of Cash	$	127.3

The table below reflects the sources and uses of cash on the 2020 Effective Date:

Sources:
Proceeds from the 2028 First Lien Notes	$	637.0
Total Sources	637.0
Uses:
Payment of Predecessor revolving credit facility	(900.0)
Upfront payment of the Opioid-Related Litigation Settlement	(447.4)
Upfront payment of the Acthar Gel-Related Settlement, inclusive of settlement interest	(17.8)
Payment of secured, administrative, priority and trade claims	(26.2)
Payment of professional fees	(43.5)
Payment to fund professional fees escrow (prepaid and other current assets restricted cash)	(89.0)
Payment of general unsecured claims	(135.0)
Payment of noteholder consent fees	(19.3)
Payment of costs, fees and expenses related to exit-financing activities, an exit fee associated with predecessor senior secured loans and accrued and unpaid interest on certain pre-emergence debt	(53.5)
Total Uses	(1,731.7)
Net Uses of Cash	$	(1,094.7)

Adjustment Adjustment, Current Liabilities

The following table reconciles reorganization adjustments to accrued and other current liabilities:

Severance - Exiting Chief Executive Officer (“CEO”)	$	5.7
Reinstatement of various successor obligations from LSTC	15.4
Success fees for professionals incurred on 2020 Effective Date	29.7
	$	50.8

Reorganization Adjustments, Liabilities Subject to Compromise

LSTC were settled as follows in accordance with the 2023 Plan (in millions):

Liabilities subject to compromise
Accrued interest	$	158.8
Debt (1)	3,512.1
Acthar Gel-Related Settlement liability (1)	236.1
Opioid-Related Litigation Settlement liability (1)	1,025.0
Other non-current liabilities	0.1
Total liabilities subject to compromise	$	4,932.1
To be reinstated on the 2023 Effective Date:
Acthar Gel-Related Settlement liability	$	(236.1)
Other non-current liabilities	(0.1)
Total liabilities reinstated	$	(236.2)
Consideration provided to settle amounts per the 2023 Plan
Issuance of Successor ordinary shares	$	(1,169.7)
Issuance of Opioid CVRs	(25.1)
Issuance of Second-Out Takeback Term Loans and Second-Out Takeback Notes	(1,535.1)
Total consideration provided to settle amounts per the 2023 Plan	$	(2,729.9)
Gain on settlement of liabilities subject to compromise	$	1,966.0

LSTC were settled as follows in accordance with the 2020 Plan (in millions):

Liabilities subject to compromise
Accounts payable	$	17.7
Accrued interest	35.2
Debt	3,746.2
Environmental liabilities	67.2
Acthar Gel-Related Settlement liability	630.0
Opioid-Related Litigation Settlement liability	1,722.4
Other current and non-current liabilities	151.6
Pension and postretirement benefits	32.4
Total liabilities subject to compromise	$	6,402.7
Reinstated on the 2020 Effective Date:
Accounts payable	$	(0.1)
Other current and non-current liabilities	(27.3)
Pension and postretirement benefits	(32.4)
Total liabilities reinstated	$	(59.8)
Consideration provided to settle amounts per the 2020 Plan
Issuance of successor common stock	$	(2,189.7)
Issuance of Opioid Warrants	(13.9)
Issuance of First Lien Term Loans and 2025 Second Lien Notes	(1,778.3)
Acthar Gel-Related Settlement liability	(79.7)
Opioid-Related Litigation Settlement liability	(504.3)
Issuance of 2029 Second Lien Notes to holders of the Guaranteed Unsecured Notes	(190.2)
Contingent liabilities for proceeds of sale of StrataGraft PRV and Terlivaz CVR	(41.8)
Cash payment	(601.3)
Total consideration provided to settle amounts per the 2020 Plan	$	(5,399.2)
Gain on settlement of liabilities subject to compromise	$	943.7

Reorganization Adjustment, Equity

Pursuant to the 2023 Plan, as of the 2023 Effective Date, all Predecessor preferred and ordinary shares were cancelled without any distribution. The following table reconciles reorganization adjustments made to Successor ordinary shares, Opioid CVRs and additional paid in capital:

Par value of 19,696,335 shares of Successor ordinary shares issued to holders of the Predecessor First Lien Notes and Second Lien Notes (par valued at $0.01 per share)	$	0.2
Fair value of Opioid CVRs issued to the Trust (1)	25.1
Additional paid in capital - Successor ordinary shares	1,169.5
Successor equity	$	1,194.8

(1)The fair value of the Opioid CVRs were estimated using a Black-Scholes model with the following assumptions: $60.28 implied share price of the Successor; exercise price per share of $99.36; expected volatility of 65.0%; risk free interest rate of 4.49%, continuously compounded; and a holding period of four years. The expected volatility assumption is based on the historical and implied volatility of the Company's peer group with similar business models.

Pursuant to the 2020 Plan, as of the 2020 Effective Date, all of the Company's preferred and ordinary shares in existence prior to the 2020 Effective Date were cancelled without any distribution. The following table reconciles reorganization adjustments made to the Company's common stock, Opioid Warrants and additional paid in capital:

Par value of 13,170,932 shares of Common Stock issued to former holders of the Guaranteed Unsecured Notes (par valued at $0.01 dollars per share)	$	0.1
Fair value of Opioid Warrants issued to holders of the Guaranteed Unsecured Notes (1)	13.9
Additional paid in capital - Common Stock	2,189.6
Equity	$	2,203.6

(1)The fair value of the Opioid Warrants was estimated using a Black-Scholes model with the following assumptions: $18.50 stock price of the Company; exercise price per share of $103.40; expected volatility of 62.28%; risk free interest rate of 3.34%, continuously compounded; and a holding period of six years. The expected volatility assumption is based on the historical and implied volatility of the Company's peer group with similar business models.

Reorganization, Retained Deficit

Retained (deficit) earnings - The cumulative effect of the consummation of the 2023 Plan on the Predecessor's retained deficit is as follows:

Gain on settlement of LSTC	$	1,966.0
Professional and exit fees	(24.0)
Release of prepaid insurance (1) and directors fees	(20.0)
Fair value of First-Out Takeback Term Loans and related embedded derivative	(21.2)
Income tax benefit on plan adjustments	585.9
Cancellation of Predecessor equity	2,199.9
Net impact on retained earnings	$	4,686.6

(1)Write off of prepaid expenses related to premiums for the Predecessor's directors' and officers' insurance policy.

Retained deficit - The cumulative effect of the consummation of the 2020 Plan on the Company's retained deficit was as follows:

Gain on settlement of LSTC	$	943.7
Professional, success and exit fees	(91.6)
Release of prepaid success fee	(10.9)
Release of prepaid insurance (1)	(9.2)
Accrual of severance for former CEO	(5.7)
Income tax expense on plan adjustments	(102.7)
Cancellation of predecessor equity	4,002.3
Net impact on retained deficit	$	4,725.9

(1) Write off of prepaid expenses related to premiums for the predecessor's directors' and officers' insurance policy in existence prior to the 2020 Effective Date.

Fresh-Start Adjustments, Retained Deficit

The cumulative effect of the fresh-start accounting on the Successor's retained deficit is as follows:

Fresh-start adjustment:
Inventories	$	257.6
Property, plant and equipment	(150.2)
Intangible assets	(1,633.7)
Acthar Gel-Related Settlement	88.6
Other assets and liabilities	(15.0)
Total fresh-start adjustments impacting reorganization items, net	(1,452.7)
Fresh-start adjustments to accumulated other comprehensive income, net of zero tax benefit	11.1
Total fresh-start adjustments recorded to income tax benefit	209.1
Net fresh-start impact to accumulated deficit	$	(1,232.5)

The cumulative effect of the fresh-start accounting on the predecessor's retained deficit as of the 2020 Effective Date was as follows:

Fresh-start adjustment:
Inventories	$	851.8
Property, plant and equipment, net	(299.2)
Intangible assets, net	(2,014.4)
Current asset held for sale	100.0
Debt	18.4
Other assets and liabilities	(11.2)
Total fresh-start adjustments impacting reorganization items, net	(1,354.6)
Fresh-start adjustments to accumulated other comprehensive income, net of $0.3 million of tax benefit	(9.9)
Total fresh-start adjustments recorded to income tax benefit	582.1
Net fresh-start impact to accumulated deficit	$	(782.4)

Reorganization Adjustments, Debt

Reflects the fair value adjustments to the carrying value of debt instruments impacted by the 2023 Plan as determined by the Black-Derman-Toy model as follows:

First-Out Takeback Term Loans	$	15.0
Second-Out Takeback Term Loans	46.3
Takeback Notes	59.3
Total fair value adjustment to debt instruments	$	120.6

Fair value adjustments to the carrying value of debt instruments impacted by the 2020 Plan as determined by the Black-Derman-Toy model as follows:

2017 Replacement Term Loans	$	(169.4)
2018 Replacement Term Loans	(42.2)
2025 Second Lien Notes	(95.7)
2029 Second Lien Notes	(184.8)
Total fair value adjustment to debt instruments	$	(492.1)

Schedule of Debtor Reorganization Items, net

Reorganization items, net, were comprised of the following:

	Successor		Predecessor
	Period from November 15, 2023 through December 29, 2023		Period from December 31, 2022 through November 14, 2023		Period from June 17, 2022 through December 30, 2022		Period from January 1, 2022 through June 16, 2022
Gain on settlements of LSTC	$	—	$	(1,966.0)	$	—	$	(943.7)
Loss on fresh-start adjustments	—		1,452.7		—		1,354.6
Adjustments of other claims	—		1,139.5		—		5.4
Professional and other service provider fees	4.0		61.7		23.2		161.1
Success fees for professional service providers	—		—		—		44.3
Debt financing	—		154.6		—		—
Debt valuation adjustments	—		21.2		—		—
Write off of prepaid premium for directors and officers' insurance policies, net, and directors fees	—		20.0		—		9.2
Acceleration of the vesting of Predecessor equity awards upon the 2023 Effective Date	—		9.0		—		—
Total reorganization items, net	$	4.0	$	892.7	$	23.2	$	630.9