Shares of DNA testing company 23andMe Holding Co. ME are trading lower in premarket on Monday after the firm filed for bankruptcy.
The company has voluntarily filed for Chapter 11 bankruptcy to enable a sale process that seeks to maximize its business value.
It plans to maintain normal operations throughout this period. The move follows the recent rejection of a non-binding acquisition offer from CEO Anne Wojcicki and her affiliates.
Pending court approval, the company intends to sell its assets under Chapter 11 or Section 363 of the U.S. Bankruptcy Code.
“After a thorough evaluation of strategic alternatives, we have determined that a court-supervised sale process is the best path forward to maximize the value of the business,” said Mark Jensen, Chair and member of the Special Committee of the Board of Directors.
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“We expect the court-supervised process will advance our efforts to address the operational and financial challenges we face, including further cost reductions and the resolution of legal and leasehold liabilities.”
23andMe will hire an independent investment banker to gather bids over a 45-day timeframe, and if several offers are received, an auction will take place to optimize asset value.
Any prospective buyers must adhere to legal standards for customer data privacy. The sale process will also require regulatory approval.
As part of its bankruptcy proceedings, 23andMe has submitted motions to lower operational expenses, which includes rejecting specific real estate leases. The company is also requesting court approval to continue paying employee salaries and compensating suppliers throughout the process.
Furthermore, 23andMe aims to address outstanding legal matters stemming from the cyber incident that occurred in October 2023 during the bankruptcy process.
23andMe has secured a commitment for $35 million in debtor-in-possession financing from JMB Capital Partners. This funding, along with operational cash flow, is expected to support the company throughout the restructuring process.
Price Action: ME shares traded lower by 44.1% at $0.9999 in premarket at last check Monday.
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