Invitae gets court approval for five-month bankruptcy sale
15/02/2024 19:04
By Dietrich Knauth
NEW YORK, Feb 15 (Reuters) - Invitae Corp NVTAQ.PK
received court approval on Thursday to run a five-month
bankruptcy sale process, allowing the genetic testing company to
find a buyer and exit from Chapter 11 by late July.
U.S. Bankruptcy Judge Michael Kaplan approved the
Softbank-backed 9984.T company's proposed bid procedures at a
court hearing in Trenton, New Jersey, setting an April 10
deadline for initial bids and scheduling an auction for April
17.
Invitae, which filed for bankruptcy protection on Tuesday,
intends to seek court approval of the sale on May 6 and expects
to close the transaction by July 21.
Invitae does not expect equity shareholders to receive any
recovery in its bankruptcy, according to court documents. It has
about $1.5 billion in debt. Its bankruptcy petition estimated
that its total assets are worth between $500 million and $1
billion.
Invitae began reaching out to potential buyers in December,
and it has already received some initial bids, Invitae attorney
Nicole Greenblatt told Kaplan.
Greenblatt said Invitae went bankrupt because it took on too
much debt to fund its expansion from 2019 to 2021. Invitae made
13 acquisitions during that period, increasing its debt by $1.5
billion and leaving the company ill-prepared for a recent rise
in interest rates, increased competition, and declining demand
for elective genetic tests.
"While these acquisitions helped Invitae expand into new
markets and round out its product portfolio and improve customer
experience, they also required large sums of capital for
investment and significant operating expenses," Greenblatt said.
Invitae began taking steps to reduce its debt in 2022,
terminating 1,200 employees, downsizing office space and testing
labs, and selling off unprofitable, non-core businesses, the
company said in court filings.
Invitae's divestitures included companies that it acquired
during its $1.5 billion acquisition spree, such as Ciitizen, an
AI-focused patient network business that Invitae acquired in
2021 for $325 million.
Those moves saved Invitae approximately $326 million in
annual costs, but were not enough to turn a profit, according to
court filings. Invitae reported a $1.3 billion net loss for the
first nine months of 2023.
(Reporting by Dietrich Knauth; Editing by Leslie Adler)
((Dietrich.Knauth@thomsonreuters.com;))