On March 17, 2023, Alexander E. Parker, on behalf of The Buxton Helmsley Group, Inc. ("BHG") and its affiliates, publicly disclosed the results of an investigation into Mallinckrodt plc that Mr. Parker had led. In light of those findings, BHG had established a short position in the company's post-reorganization junior debt securities. Mallinckrodt had entered Chapter 11 proceedings in October 2020 and had emerged from those proceedings in June 2022.
In a thirty-five-page public report issued that day, Mr. Parker set out BHG's findings in detail. The report described how the company had, in the period leading up to its emergence from reorganization, apparently concealed billions of dollars of expenses from its filings with the U.S. Securities and Exchange Commission, in apparent violation of GAAP and Regulation S-X, and how, under the same Chief Financial Officer, the company had resumed what BHG characterized as a mirror scheme of apparent accounting and securities fraud following its emergence.
The report also presented BHG's finding that the company's Chief Financial Officer was not the actively licensed Certified Public Accountant that the company's website represented him to be—a representation to investors that remained uncorrected until Mr. Parker, in a subsequent public letter, referred the matter to the Pennsylvania State Board of Accountancy, citing the statutory provisions under which the officer could be subject to disciplinary action.
Mallinckrodt's leadership did not deny BHG's evidence of apparent accounting and securities fraud, declining to address the allegations on any level.
The company's stock price subsequently declined by more than 85%, as first-lien creditors pressed it toward renewed restructuring negotiations. Throughout those negotiations, Mr. Parker publicly placed the company on notice that statements made on its earnings calls further supported BHG's findings of apparent violations of accounting standards and the securities laws.
Mallinckrodt then declined to hold a scheduled quarterly earnings call—after Mr. Parker had cautioned the company against continuing what BHG regarded as contradictory statements—before re-filing for Chapter 11 protection on August 28, 2023, days after Mr. Parker's final public letter, in the U.S. Bankruptcy Court for the District of Delaware (Case No. 23-11258).
On September 11, 2023, Mr. Parker, on behalf of BHG, issued a public statement identifying the specific page of the company's disclosure statement, filed in the bankruptcy proceedings, that set out the asset-value depreciation expenses BHG had alleged—since its initial public report of March 17, 2023—were present in fact yet concealed from the company's filings with the SEC.
On November 30, 2023, the SEC charged Mallinckrodt with concealing more than $500 million of liability exposure from its pre-reorganization financial statements, in violation of GAAP ASC 450-20 and the anti-fraud provisions of the U.S. securities laws. Mr. Parker had alerted the Commission to evidence of violations of these accounting standards and securities laws in October 2021.
The investor-engagement campaign described above was conducted by The Buxton Helmsley Group, Inc., which was previously authorized to use the "Buxton Helmsley" trademark. The Buxton Helmsley Group, Inc. is in no way affiliated with Buxton Helmsley, Inc. or its affiliated entities. The foregoing is relevant to Buxton Helmsley, Inc. and its affiliated entities solely by reason of their employment of the same key principal, Alexander E. Parker.
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