Akorn Pharmaceuticals Investigated Following Bankruptcy and Abrupt Mass Layoffs
Ilinois-based pharmaceutical company Akorn Operating Co., is under investigation by the Illinois Department of Labor (IDOL), following the company’s filing for Chapter 7 bankruptcy this week and the abrupt layoffs of approximately 400 employees.
In a letter published by the Herald & Review, the company’s CEO, Douglas Boothe, said on Wednesday, that all of Akorn’s U.S sites would be closed with immediate effect. It also notified its workers that they would be permanently laid off. The company’s locations in the U.S. include its corporate headquarters in Gurne. Akorn also has U.S. manufacturing plants located in Decatur, Illinois, Somerset, New Jersey and Amityville, New York. Further, the company has R&D facilities in Vernon Hills, Illinois, and Cranbury, New Jersey. Outside of the U.S., the company has production facilities in Hettlingen, Switzerland.
The generic and specialty medicines maker notified its workers that it filed for bankruptcy and that they would be laid off within 24 hours. An IDOL spokesperson confirmed on Thursday that the agency is investigating the situation because Akorn didn’t file the required 60-day notice of mass layoffs or plant closures until Wednesday.
The Herald & Review has also obtained a video recording of the Zoom announcement to the employees by Akorn’s CEO and president, Douglas Boothe.
During the Zoom meeting video, Douglas Boothe said:
“Yesterday we notified the FDA regarding our bankruptcy filing and the impact that this decision will have on all Akorn employees, our customers and patients in the U.S. healthcare system. I realize that this is a tremendous shock, and it will take time to absorb the news and what it means to you, your colleagues and your family.”
In the video Boothe was accompanied by Beth Zelnick Kaufman, Akorn’s Chief Legal Officer. He further informed his employees:
“Be assured you’ll be fully paid through Thursday, tomorrow, and as part of that pay you will receive all of your accrued and unused vacation time. Your health and welfare benefits will also continue through the end of this pay period, 2-28. The severance plan has been terminated in connection with the bankruptcy filing, and so we will not be able to pay severance or provide any extended COBRA coverage.”
Akorn Pharmaceuticals is known for developing, manufacturing and marketing a broad array of ophthalmic, injectable and specialty sterile and non-sterile pharmaceuticals. However, since 2018, the company’s downfall has been ongoing, following Fresenius pulling out on a planned $4.3 billion Akorn buyout due to data integrity concerns. Akorn had also filed for bankruptcy back in 2020, but this was under Chapter 11which allowed the company to restructure.
IDOL will now be looking into Akorn’s handling of the site closures and abrupt layoffs. Should the department find violations, Akorn is likely to face civil penalties.