Zymergen files Chapter 11 bankruptcy with plans to sell assets

By Sarah Lizee

Olympia, Wash., Oct. 3 – Zymergen Inc. and three affiliates filed Chapter 11 bankruptcy on Wednesday morning in the U.S. Bankruptcy Court for the District of Delaware.

Zymergen, a science and material innovation company focused on designing, developing and commercializing bio-based products, was acquired by Ginkgo Bioworks Holdings, Inc. in fall of 2022.

The company said that, despite the significant value of its assets and the merger, it has continued to operate on a cash negative basis, even though it has taken steps to reduce its operating costs, including reductions in force prior to and following the merger.

Zymergen said it also expends significant amounts in defending against litigation that started following its initial public offering, including an investigation launched by the Securities and Exchange Commission.

In September, the debtors hired Intrepid Investment Bankers LLC to conduct a thorough marketing process to sell substantially all of the debtors’ assets through a Chapter 11 court-supervised sale process.

Additionally, the debtors have engaged in negotiations with Ginkgo Bioworks Inc., which ultimately resulted in a stalking horse agreement that includes a $5 million going-concern bid.

Bid protections to the stalking horse would include a $250,000 expense reimbursement.

Under the company’s proposed bid procedures, the bid deadline would be 4 p.m. ET on Dec. 5, an auction would be held on Dec. 13, and a sale hearing would take place on Dec. 18.

In its petition, the company listed 200 to 999 creditors, $100 million to $500 million in assets and $100 million to $500 million in liabilities.

Its largest unsecured creditors are Wilmer Cutler Pickering Hale and Dorr LLP, based in San Francisco, with a $2.09 million legal fees claim, and BRE-BMR 5300 Chiron LP, based in San Diego, Calif., with a $1.84 million lease claim.

The Emeryville, Calif.-based biotech company filed bankruptcy under Chapter 11 case number 23-11661.

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