23andMe files for bankruptcy! What will happen to the company?
23andMe determined that a court-supervised sale process is the best option to maximize the value of the business
23andMe Holding Co., a leading company in human genetics and biotechnology, announced that it has initiated a voluntary bankruptcy process under Chapter 11 in the United States Bankruptcy Court for the Eastern District of Missouri. Here’s what we know so far.
Why did 23andMe file for bankruptcy?
According to Mark Jensen, Chairman and member of the Special Committee of the Board, after a thorough evaluation of strategic alternatives, the company determined that a court-supervised sale process is the best option to maximize the value of the business.
“We expect this process to drive our efforts to address the operational and financial challenges we face, including further cost reductions and resolving legal and lease liabilities,” he stated.
What will happen to 23andMe?
The company has stated its intention to continue operating normally throughout the sale process. So far, it has confirmed that there have been no changes in how it stores, manages, and protects customer data.
After requesting court approval to initiate a process to sell nearly all its assets through a bankruptcy plan under Chapter 11 of the U.S. Bankruptcy Code, 23andMe will have to wait for the court’s approval.
If the bankruptcy request is approved, the company, with the support of an independent investment banker, will begin a 45-day process to receive qualified offers. If multiple proposals are received, an auction will be held to maximize the value of its assets.
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What will happen to 23andMe employees?
In the statement, Jensen assured that the company will support all of its employees throughout the sale process. The company has also filed standard motions with the court requesting relief measures, such as authorization to pay employees’ wages and benefits, as well as advance compensation for certain suppliers.
To reduce operational costs, the company has also requested court approval to cancel several contracts, including leases for properties in Sunnyvale and San Francisco.
23andMe announces changes to its Board of Directors
Amid the bankruptcy declaration and the sale process, Anne Wojcicki resigned as CEO of the company, although she will remain on the Board of Directors. In her place, the Board appointed Joe Selsavage, Chief Financial Officer, as Interim CEO, and Matt Kvarda, Managing Director of Alvarez & Marsal, as the company’s Restructuring Officer.
Additionally, Thomas Walper, former partner in the Financial Restructuring practice at Munger, Tolles & Olson LLP, was appointed as the independent director of the Board and Special Committee.
The History of 23andMe
Founded in 2006, 23andMe is an innovative company specializing in biotechnology and personal genomics. The initiative was driven by Anne Wojcicki, Linda Avey, and Paul Cusenza, who had close ties to the entrepreneurial world of Silicon Valley. Their goal was clear: to democratize access to genetic testing.
The idea was to offer genome analysis through a kit that could be delivered directly to homes, allowing users to access their genetic information in a convenient and digital environment. This way, individuals could learn about their ancestry, genetic predispositions to certain diseases, and other inherent traits, all without the need for medical intermediaries. All that was required was a simple saliva sample.
Although its headquarters were based in San Francisco, its primary platform was a website where users could purchase the kits. From there, they could also access various tools that not only allowed them to store their analytical results but also explore their ethnic background and connect with distant relatives.
Why is it called 23andMe?
The company’s name refers to the number of chromosome pairs that make up the human genome, which is 23.
