Dive Brief:
- Invitae filed for Chapter 11 protection late Tuesday, intended to keep the genetic testing firm running as it pays down debt.
- The San Francisco-based company had about $535 million in assets and about $1.62 billion in debts as of Sept. 30, according to a filing with the U.S. Bankruptcy Court for the District of New Jersey.
- Invitae is asking for approval to keep paying its approximately 1,235 employees as it goes through the bankruptcy process, according to a court filing.
Dive Insight:
Invitae had taken several steps to pare down expenses before filing for bankruptcy. The company sold its reproductive health assets in January to Natera and reduced its workforce by more than 1,200 employees, according to a court filing.
Earlier this month, the Wall Street Journal reported Invitae was exploring strategic options, including a potential bankruptcy filing, as the company formed a special committee to shore up its capital structure.
Those efforts still weren’t enough to offset looming debt.
“We have been working diligently over the past eighteen months to improve our cash position by realigning our portfolio and focusing on our most impactful business lines,” Invitae CEO Ken Knight said in a statement. “These strategic initiatives have accelerated our path to positive cash flow in order to realize our potential as an industry-leading genetics platform. However, we still need to address the company’s debt position through these chapter 11 proceedings.”
Invitae said the process will allow the company to safeguard its business, customers, patients and employees while working through a sale overseen by the court.
The Chapter 11 filing includes a transaction support agreement, where the company’s creditors agreed to vote in favor of its bankruptcy plan, support its sale process and agree to its use of cash on hand during the cases.
ARK Investment Management and the Vanguard Group are two of Invitae’s largest shareholders, according to an April proxy filing. Invitae also raised nearly $1.2 billion in convertible debt from Softbank in 2021.
The company is working with Kirkland & Ellis as legal counsel, Moelis & Company as investment banker and FTI Consulting as its financial and communications advisor.