Bankruptcy Trustee Seeks To Unload Assets by Mid-December

November 13, 2019 | By Rick Archer | Law360

Saying the company is in danger of losing access to both cash collateral and its laboratory and has been on the market for months, trustee Alfred Giuliano asked the court on Tuesday to approve bid procedures that will put uBiome's assets on the block by Dec. 12 and see the sale closed by Dec. 19.

UBiome, founded in 2012 to provide mail-in fecal testing services, filed for bankruptcy Sept. 4 after a federal probe into its insurance billing practices and a rushed departure of founding executives rocked the company, which had just been valued at $600 million.

UBiome originally said it was seeking a sale under Chapter 11, with the company to be kept afloat through the process with an approximately $14 million debtor-in-possession loan provided by SVB and funded by venture capital firm 8VC, an equity holder in the company.

However, the unsecured creditors committee filed an objection to the DIP proposal, arguing it would benefit SVB and 8VC at the expense of the estate and other creditors. In October, uBiome filed for and was granted a conversion to Chapter 7, saying it had failed to reach a deal on the objection and was facing a default on the DIP loan.

The trustee's proposal is to solicit a stalking horse and standard bids on the company's assets, which include more than 45 patents and trade secrets related to gene sequencing. The stalking horse bids would be due Dec. 2 and standard bids four days later. The auction would be held Dec. 12, followed by a hearing six days later to approve the sale.

In a separate motion asking to shorten the notice period and schedule for the bid procedures, Giuliano said the Dec. 19 closing date was chosen because, despite talks with uBiome's lenders and landlord, he expects the company will lose access to both cash collateral and its San Francisco laboratory by mid-December. He said loss of the lab could mean the loss of refrigerated samples that are among the assets he is trying to sell.

In his sale procedures motion Giuliano said uBiome and its investment banker had begun marketing the company before the Chapter 11 filing.

"Many parties remain interested in purchasing some or all of the assets that remain following conversion," with some having already begun their due diligence, he said.

A hearing on the motion has been scheduled for Nov. 20.

Counsel for the trustee did not immediately respond to requests for comment Wednesday.

The trustee is represented by Bradford J. Sandler, Peter J. Keane and Colin R. Robinson of Pachulski Stang Ziehl & Jones LLP.

The case is In re: uBiome Inc., case number 19-bk-11938, in the U.S. Bankruptcy Court for the District of Delaware.

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