Below is our initial take on recent bankruptcy-related developments:
23andMe files for bankruptcy, Anne Wojcicki steps down as CEO | CNBC
Genetic testing company 23andMe filed for Chapter 11 bankruptcy protection in Missouri federal court. Anne Wojcicki, co-founder and CEO, has resigned effective immediately and will remain a member of the board while Joseph Selsavage, the current CFO, will serve as interim CEO.
S&K Take: Genetic testing company 23andMe has filed its anticipated bankruptcy. The company filed in St. Louis (its been a minute since we have seen a big case there) with the intent to sell its assets. The company has no funded debt, but has approximately $218 million in unsecured obligations, including a hefty payment obligation related to a hack of customer information. The case will be funded by a third-party DIP facility in the amount of $35 million. The company has had some well-documented trials and tribulations, undertaking a SPAC transaction in the summer of 2021, following with a substantial acquisition later that year. The company’s stock plummeted from a $6 billion market cap to near $0. CEO Wojcicki (whose sister was the CEO of YouTube for some time) tried to buy back the stock, only to have the entire independent board resign. There is also a massive privacy component to this case, since the Debtors possess the most personal of PII. Seems like quite a story for a relatively straightforward bankruptcy. We will be monitoring and reporting on any mudslinging, intriguing allegations, or interesting twists and turns as they occur.
Yellow Corp. says it reached Ch. 11 plan deal with creditors | Law360
U.S. Bankruptcy Judge Craig Goldblatt agreed to postpone his decision on a $6 billion contested claims in transportation company Yellow Corp’s Chapter 11 bankruptcy plan after attorneys for Yellow said they came to a plan settlement.
S&K Take: The Yellow bankruptcy has been an incredible roller coaster ride for claimants. From meager beginnings, equity holders saw billions in sale proceeds which promised sizable recoveries, only for those hopes and dreams to be dashed by billions in pension withdrawal liabilities. Those liabilities increased the unsecured creditors’ pool exponentially and left equity miles away from in the money. The Debtors’ initial position was that those claims should be disallowed, primarily because those plans will be fully funded by the government. Judge Goldblatt disagreed, and the parties have been arguing about the quantum of those claims since. The issue is fully briefed and argued, and Judge Goldblatt is set to render a decision. The Debtors, the UCC and some claimants have, in an unusual twist, asked the Court to hold off on issuing that decision, as they have an agreement in principle around a settlement that would permit a plan to go forward. MFN, an equity holder, has objected to the pension claims and wants a decision. The Judge split the baby and basically said he was going to hand down a decision next Friday, although he wouldn’t put his thumb on the scale and say that a settlement could dispose of a claim subject to a third-party objection. This will be worth watching.
Vertical farming company Plenty files for bankruptcy after raising nearly $1B | TechCrunch
San Francisco-based vertical farming company Plenty filed for Chapter 11 bankruptcy after raising nearly $1 billion in funding from investors like Walmart and Jeff Bezos. Plenty has received $20.7 million in debtor-in-possession financing as part of its bankruptcy restructuring plan.
S&K Take: Another bankruptcy in the ag tech and vertical farming space (see AeroFarms, Kalera, and AppHarvest, e.g.). Plenty comes with a plan on file, which provides a toggle for either a recap transaction or a sale of the company. As noted, there are some big-name investors here, although it sounds like the company hasn’t raised equity since 2022. The company has a DIP and a timeline requiring confirmation within 55 days of the petition date. Relatively little in the way of secured debt, but some dispute over a few mechanics/materialmen’s liens. The recap gets the first crack here, and the Debtors are looking for at least $30 million from the bridge lender, M&M claimants and GUCs. Interesting structure, let’s see if it works.
