Pear Therapeutics files Chapter 11 bankruptcy to pursue sale

By Sarah Lizee

Olympia, Wash., April 10 – Pear Therapeutics, Inc. and wholly owned subsidiary Pear Therapeutics (US), Inc. filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on Friday, according to a press release.

Pear intends to pursue a sale of the business or its assets through the process.

On April 5, the company’s board of directors authorized the termination of about 170 employees, or 92% of full-time employees, and restructured the company’s operations to maintain a transition team of about 15 employees to continue operations in connection with the Chapter 11 cases, according to an 8-K filed with the Securities and Exchange Commission.

The company said it intends to continue its scaled-down operations as it seeks to execute an expedited sale process.

Under the company’s proposed bid procedures, the bid deadline would be May 1, the auction would be held on May 3, and a sale hearing would take place on May 8.

Having reached a settlement prior to the filing with its lender, Perceptive Credit Holdings, Pear intends to use available cash to fund post-petition operations and costs in the ordinary course of its business.

Under the settlement agreement, $18.66 million in cash was paid to Perceptive, and the obligors assigned all their rights, title and interest in and to a federal tax refund claim estimated at up to $4.7 million. There was an early prepayment fee of $3.6 million.

Perceptive will have an unsecured claim against Pear up to a maximum total claim amount of $10.4 million, which will rank pari passu in right of payment with all other non-priority general unsecured claims.

The debtors filed first-day motions with the bankruptcy court requesting customary relief that will enable them to transition into Chapter 11 without material disruption to their ordinary course operations.

In its petition, the company listed 1,000 to 5,000 creditors, $65.57 million in assets and $50.95 million in debt.

Its largest unsecured creditor is Perceptive, which is based in New York, with its $10.4 million loan debt claim. No other creditors were listed with unsecured claims of $1 million or more.

In anticipation of the Chapter 11 filing, Corey McCann stepped down as the company’s chief executive officer and president. Christopher D.T. Guiffre, the company’s chief operating officer and chief financial officer, will serve as the company’s principal executive officer following the departure of McCann.

McCann will continue to serve as a member of the board and will provide consulting services to the company during the sale process.

Pear is represented by Foley Hoag LLP as counsel, Gibbons PC as co-counsel, Sonoran Capital Advisors as restructuring adviser and MTS Health Partners, LP as restructuring investment banker.

Boston-based Pear Therapeutics develops and commercializes software-based medicines called prescription digital therapeutics. The Chapter 11 case number is 23-10429.

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