Biora Therapeutics undertakes Chapter 11 sale process to position business for future growth

Frequently Asked Questions

Is Biora Therapeutics going out of business?

No. Biora Therapeutics is not going out of business and operations will continue in the ordinary course while it conducts a sale of substantially all of its assets. The company does not expect any interruptions in its day-to-day operations. 

How will the restructuring process affect day-to-day operations?

Biora will continue normal business throughout this process. The company has secured debtor-in-possession financing from its existing lenders to support operations during the chapter 11 process. The company intends to continue working closely with its suppliers and pay for goods and services delivered after the filing under normal terms, as required by bankruptcy rules.

Does Biora have adequate funding to conduct its operations during the restructuring?

Yes. The company has adequate working capital to maintain normal operations throughout the sale process. It has secured debtor-in-possession financing commitments totaling up to $60 million, which includes a $20 million new money term loan facility expected to become available shortly after the case begins. This will allow the company to emerge from the sale with an improved balance sheet, providing greater financial stability in the future.

What is Chapter 11?

Chapter 11 is a chapter of the U.S. Bankruptcy Code that governs court-supervised corporate restructurings.  A company that files for protection under chapter 11 is allowed to continue to operate normally and maintain its business “in the ordinary course” – or business as usual, while also working to implement a sale or restructuring plan.

What happens during Chapter 11?

Upon the filing of bankruptcy petition an “automatic stay” is imposed that prevents creditors from collecting money and debts owed by the company for activities that arose prior to the filing.  The automatic stay allows the company to delay loan payments, as well as payments owed to vendors for goods and services received before the filing.

Chapter 11 benefits corporations seeking to restructure since they are largely permitted to operate in the same manner as they did before the filing. For example,

• Company facilities may remain open;
• Employees may continue to receive their regular wages and benefits;
• Goods and services purchased after the filing date may be paid for in the ordinary course of business.

In the case of Biora Therapeutics, company operations will continue, as it seeks to conduct a sale of substantially all of its assets.

What is the impact on shareholders? What will happen to common equity?

We recognize that a key part of what the company is seeking to accomplish with the planned sale process is a change in ownership, which will impact shareholders. Ultimately, these actions are necessary to position Biora as a competitive and financially strong business in the years to come.

Who should shareholders contact for questions about their shares?

Any questions you may have about the Company’s chapter 11 filing would be best directed to your financial advisor or legal counsel.

What does the restructuring process entail? What’s next?

A Section 363 sale is a court-supervised sale process that the company intends to use to restructure its current ownership in a manner that reduces its corporate debt and maximizes value for its stakeholders. Biora will continue normal business operations while conducting a comprehensive marketing and sales process to identify the highest and best bidder. It entered Chapter 11 with a stalking horse bid from its prepetition secured term loan lenders. Once the process is complete, the Court will review and approve the sale of the company to the winning bidder, provided there are competing bids. Maintaining strong relationships with employees and vendors remains the company’s top priority throughout this process.

What is a stalking horse bid?

A stalking horse bid is an initial bid on the assets of the company, setting the opening bid for the sale process.

Are there any interested buyers? 

Yes. This is a confidential process and, accordingly, we cannot provide updates on any potential offers until the deadline for buyers to submit offers has passed. The company’s current portfolio and operations, with an improved financial structure, are an attractive investment opportunity to a number of potential buyers and the company is optimistic this will be a competitive bidding process.

How long is the process likely to take? When is the company expected to emerge from Chapter 11?

While the length of a chapter 11 proceeding depends upon many factors, the company intends to pursue an expedited sale process that will allow a sale of the business to close in late February or early March 2025, or as soon as possible thereafter. The company’s chapter 11 case will conclude as soon as practicable thereafter. Biora is committed to keeping stakeholders informed as the process moves forward.

Who will own the company when it emerges from Chapter 11?

Biora entered Chapter 11 with a stalking horse bid from its prepetition secured term loan lenders. However, during the court-supervised sale process, other parties may submit higher and better offers. The company will run a thorough marketing process in Chapter 11 to ensure that it obtains the highest and best offer for its assets. Additional information will be shared as the company progresses through the auction process.

What are the company’s assets and liabilities?

Please refer to the Chapter 11 petition filed with the Court, or visit the Kroll website at cases.ra.kroll.com/biora.

Will vendors be paid for goods and services provided before the filing date?

Under U.S. bankruptcy law, unpaid debts for goods and services provided to the company prior to the filing date of December 27, 2024, also known as “prepetition claims,” generally cannot be paid without specific Bankruptcy Court approval. All claims will be addressed as part of the bankruptcy court process. If you believe you have a prepetition claim for goods and services provided to the company prior to the filing date, you may need to file a proof of claim with the bankruptcy court to be eligible for payment on your claim. Information about the claims process is available at cases.ra.kroll.com/biora.

When can vendors expect payment for goods or services provided before the filing date? 

The company cannot make any payments or distributions related to goods or services provided prior to the filing date until the Bankruptcy Court confirms and approves a chapter 11 plan and that plan becomes effective. Currently, no chapter 11 plan has been proposed and we do not have information about when distributions might occur or if distributions are to be made.

Does the company have sufficient liquidity to fulfill obligations to current vendors and to continue operating in the ordinary course?

Yes, as a part of the restructuring process, the company has received commitments for secured debtor-in-possession (DIP) financing to provide the Company with greater financial flexibility and sufficient liquidity to meet its obligations to customers during the restructuring process. 

What is the status of existing vendor and supplier agreements? Do these remain in place?

During a chapter 11 process, companies continue to operate under existing contracts until the Company determines whether to reinstate or assign its contracts. 

Will the company continue to order goods and services from its vendors? Will vendors be paid for goods and services provided after the filing date?

Yes, Biora’s operations will continue in the normal course throughout the sale process. The company will continue to order and pay for post-petition goods and services to meet ongoing business needs. Invoices for goods and services provided after the filing date should be submitted through the existing accounts payable channels. Payments will be processed in the ordinary course and/or in accordance with contract terms, if applicable.

The company values the important relationships has developed with its vendors and is committed to collaborating closely with them throughout the chapter 11 process. The cooperation of vendors and suppliers will help ensure that the company can continue to operate for many years to come.

How do I file a proof of claim?

The Court has not yet set a deadline for creditors to file proof of claim forms. Once the Court sets a deadline, all known creditors will receive notice of the deadline by which to file a claim. The deadline will also be posted on Kroll’s website at: cases.ra.kroll.com/biora. If you believe you have a claim, your proof of claim form must be filed prior to the deadline set by the Court.

When the Court sets a deadline for filing claims, proof of claim forms will be mailed to all known creditors. Forms may also be obtained at: cases.ra.kroll.com/biora/EPOC-Index

How do I know if my claim is considered pre-petition or post-petition? Is this decision based on the date of order, delivery or invoice?

Goods and services provided prior to December 27, 2024, which is the date of the company’s chapter 11 filing, are considered pre-petition. Goods and services provided on or after the filing date are considered post-petition. If you have additional questions related to this, please consult with your own attorney, as neither the company nor Kroll is permitted to provide legal advice.

Will there be a meeting of creditors?

The company’s professionals are preparing a complete list of known creditors. After the list is compiled, each known creditor will be sent an official notice of the bankruptcy filing that will include the date, time, and location for a meeting of creditors. Vendors are not required to attend this meeting, and failure to attend will not impact your rights or remedies as a vendor.

Will my contact person remain the same?

Yes. The company is continuing to operate in the ordinary course of business and business relationships should not change.