Zymergen files Chapter 11 plan of liquidation, disclosure statement

By Sarah Lizee

Olympia, Wash., Oct. 4 – Zymergen Inc. filed a Chapter 11 plan of liquidation and related disclosure statement on Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

As background, Zymergen, a science and material innovation company focused on designing, developing and commercializing bio-based products, was acquired by Ginkgo Bioworks Holdings, Inc. in fall of 2022.

The company said that, despite the significant value of its assets and the merger, it has continued to operate on a cash negative basis, even though it has taken steps to reduce its operating costs, including reductions in force prior to and following the merger.

Zymergen said it also expends significant amounts in defending against litigation that started following its initial public offering, including an investigation launched by the Securities and Exchange Commission.

In September, the debtors hired Intrepid Investment Bankers LLC to conduct a thorough marketing process to sell substantially all of the debtors’ assets through a Chapter 11 court-supervised sale process.

Additionally, the debtors have engaged in negotiations with Ginkgo Bioworks Inc., which ultimately resulted in a stalking horse agreement that includes a $5 million going-concern bid.

Generally, the plan provides for the payment in full of all allowed administrative expense claims, fee claims, U.S. trustee fees, secured claims, priority tax claims and other priority claims.

Holders of general unsecured claims shall receive a pro rata share of cash from the liquidating trust, if any, after payment of (or the establishment of a sufficient reserve) for all liquidating trust expenses and all senior claims.

There will be no recovery to the holders of subordinated claims, interests, intercompany claims or intercompany interests.

Distributions under the plan will be funded from cash on hand, including the proceeds of the sales transactions that are received before, on, or after the effective date.

The Emeryville, Calif.-based biotech company filed bankruptcy on Oct. 3 under Chapter 11 case number 23-11661.

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