deCODE genetics Files Voluntary Chapter 11 Petition to Facilitate Sale of Assets
News Nov 24, 2009
deCODE genetics Inc. has announced that it has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware to facilitate the sale of substantially all of its assets. deCODE is continuing to operate its business and manage its properties as a debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code.
In recent months, deCODE and its advisors have explored multiple restructuring alternatives, including the sale of specific portions of deCODE’s operations, the sale or license of its drug discovery programs, the restructuring of its outstanding convertible notes and the obtaining of new equity financing.
As a result of these efforts, deCODE has entered into and filed concurrently with its Chapter 11 petition an asset purchase agreement with Saga Investments LLC (Saga) to sell its Iceland-based subsidiary Islensk Erfdagreining (IE), and its drug discovery and development programs.
This agreement, pursuant to Section 363 of the Bankruptcy Code, is subject to a number of contingencies, including a competitive bidding procedure and court approval in accordance with bankruptcy law. IE conducts deCODE’s human genetics research, manages its population genetics resources and provides its personal genome scans, DNA-based risk assessment tests, and genomics services for contract customers.
deCODE expects that if the asset sale is consummated it would be liquidated pursuant to a plan of liquidation which would be subject to the approval of the bankruptcy court. In the event of a liquidation, any recovery for stockholders of deCODE would be highly unlikely.
deCODE has also entered into a secured loan agreement with Saga which, subject to bankruptcy court approval, will provide the Company with interim financing to fund post-petition operating expenses. deCODE expects this debtor-in-possession financing, if consummated, to allow the delivery of services to deCODE's customers and clients to continue without interruption during the bankruptcy process. Saga’s investors include Polaris Venture Partners and Arch Venture Partners.
deCODE has filed various “first day” motions with the bankruptcy court to ensure its ability to conduct normal business operations. This Chapter 11 filing is for deCODE genetics, Inc. only and does not include IE or deCODE’s former U.S.-based subsidiaries deCODE Biostructures Inc. and Emerald BioSystems Inc., recently sold to an unrelated third party.