Former uBiome CEO Jessica Richman. Richman and co-CEO Zac Apte were placed on administrative leave in May and replaced by General Counsel John Rakow, who was also recently replaced. The company is now moving toward liquidation.
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Microbial genomics lab testing company uBiome, whose San Francisco offices were raided by the FBI in April, announced Monday that it has requested its pending Chapter 11 bankruptcy be converted to liquidation under Chapter 7 of the U.S. Bankruptcy Code.
uBiome filed Chapter 11 bankruptcy protection on Sept. 4 in a federal bankruptcy court in Delaware, where it is officially registered. The company had obtained about $8 million in debtor financing from 8VC and Silicon Valley Bank to keep operations running and was focused on completing a sale process within 75 days, according to a company spokesperson.
However, the company was unable to reach agreements on its post-bankruptcy financing and the management and the board of directors for uBiome determined that conversion to a case under Chapter 7 was in the best interests of the company and its stakeholders.
UBiome built its business on testing patients’ microbiomes based on microorganisms in the gut and other parts of the body playing a role in health. But the company got the attention of the federal government when it began billing insurance companies for its lab tests, with some companies ceasing to pay claims.
Former uBiome CEO Jessica Richman and co-CEO Zac Apte were placed on administrative leave in May and replaced by General Counsel John Rakow, who was also recently replaced. Additionally, uBiome laid off around half its global workforce in July, a major sign of trouble ahead of its bankruptcy filing. Approximately 114 positions of a total 229 worldwide were affected, including 42 in the U.S. and 72 in Latin America.
uBiome is being advised by Young Conaway Stargatt & Taylor, LLP.
A hearing at which the bankruptcy court will consider uBiome's request has not been scheduled.
