Joel R. Glucksman
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201-896-7095 jglucksman@sh-law.comFirm Insights
Response Genetics, Inc. Files for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Date: September 14, 2015
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On August 10, Response Genetics, Inc., one of the largest oncology-focused clinical sales companies in the U.S., announced that it filed for Chapter 11 bankruptcy protection.
According to a Nasdaq report, the company has entered into an agreement to sell off all its assets to industry rival, Cancer Genetics Inc.
Response Genetics falls into debt
In bankruptcy filings, the company claimed that it had an accumulated deficit of $83 million. The cancer research giant also reported $15.7 million in total debts with only $10.8 million in total assets, as of March 31.
The company blamed its under-performance due to a 3 percent decline in revenues in Q1 2015, with a net loss of roughly $4 million. As a result, the firm received a delisting notice from Nasdaq after its shares dropped below the $1 minimum bid price listing requirement, according to a GenomeWeb report. Nasdaq also informed the company that its shares were delisted after it did not meet another requirement – a minimum of $2.5 million in stockholder equity.
According to a statement released by company officials, Response Genetics needed a significant influx of new capital investment to fulfill its working capital and liquidity requirements.
The company’s reorganization plan
Response Genetics has indicated that it filed a Chapter 11 to facilitate its asset sale to Cancer Genetics. The company expects the auction sale to be completed within 60 days. As part of the sale process being conducted under Section 363 of the U.S. Bankruptcy Code, Cancer Genetics will be the stalking horse bidder, with other prospective buyers required to submit competing bids for Response Genetics’ assets. In the auction, Cancer Genetics will submit a $14 million bid with a 50-50 split of $7 million in cash and $7 million in common stock. Upon the sale, all shares of Cancer Genetics’ stock will be issued directly to Response Genetics’ secured lenders. The sale agreement also calls for an additional $3 million in financing from SWK Funding for the current business.
The company plans to maintain operations
Throughout the reorganization process, the company hopes to maintain operations. However, it is seeking court approval to maintain its current business operations, employee benefits and payroll programs.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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