Chapter 11 Bankruptcy Filing by 23andMe
23andMe, the genetic testing firm, has initiated the process of selling its assets by filing for Chapter 11 bankruptcy protection. Co-founder Anne Wojcicki is exploring options to take the company private and plans to act as an external bidder during the asset sales.
23andMe filed for Chapter 11 bankruptcy on Sunday night.
Key Developments
In a recent press release, 23andMe announced the filing of a Chapter 11 lawsuit in the U.S. Bankruptcy Court for the Eastern District of Missouri. The company stated that this step is intended to facilitate a sales process aimed at maximizing business value.
The company reassured customers that operations would continue unabated during the asset sales process, committing to maintaining the security and management of customer data.
Should the court consent to the Chapter 11 plan, 23andMe will seek bids over a 45-day period, with an auction to follow if multiple bids are received.
Potential buyers will be mandated to comply with regulations regarding the handling of customer data.
Leadership Changes Amid Financial Struggles
In a significant leadership change, Anne Wojcicki has resigned as CEO of 23andMe, effective immediately, though she remains a board member. Recently, Wojcicki attempted to lead a bid, in partnership with New Mountain Capital, to acquire all outstanding shares of 23andMe for $2.53 each, but this offer fell through as financial backing was withdrawn. In a subsequent bid, the co-founders suggested purchasing shares at a lesser price of 41 cents but were met with rejection from a special committee of independent directors.
Background on 23andMe’s Troubled Journey
23andMe went public in 2021 through a merger with a Special Purpose Acquisition Company (SPAC). Initial market capitalization soared to $6 billion, elevating Wojcicki to billionaire status. However, the company’s stock has since plummeted by over 99%, attributed to ongoing losses. In a concerning development last year, the company experienced a significant data breach, where hackers exploited recycled passwords to access sensitive user information, including over a million genetic profiles. Data allegedly included unverified entries of high-profile individuals, raising significant privacy concerns. Following this breach, 23andMe settled a lawsuit for $30 million and agreed to enhance security measures for impacted users.
Conclusion
The future of 23andMe remains uncertain as the company navigates its bankruptcy proceedings, contending with serious leadership transitions and public trust challenges. Stakeholders and consumers alike will be monitoring its next steps closely.