Sientra files bankruptcy, lines up $90 million DIP financing package

By Sarah Lizee

Olympia, Wash., Feb. 13 – Sientra, Inc. filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on Monday, according to a press release.

The company said in court documents that it has continued to face liquidity constraints because of Covid, changes in consumer spending and macro-economic factors, coupled with the sharp retraction in its breast augmentation business in 2023.

Sientra said it hasn’t been able to maintain compliance with the covenants under its prepetition first-lien term loan agreement.

The company said it worked with its lenders over the last several months and obtained temporary waivers of default while exploring strategic options for the business.

The company plans to pursue an expedited going-concern sale of its business, while continuing to support its customers during the Chapter 11 process.

“Our goal is to emerge from this process with increased financial stability and positioned for long-term success under new ownership, and we are very encouraged that multiple parties have expressed interest in an acquisition of Sientra,” Ron Menezes, Sientra’s president and chief executive officer, said in the release.

“We look forward to the opportunity to become part of an organization that understands the value of our broad product portfolio and legacy in plastic surgery. In the interim, we remain focused on providing our customers with quality service, continuous manufacturing, and access to our products.”

DIP financing

Sientra said it will use existing cash reserves and $90 million in debtor-in-possession financing from existing lenders to facilitate the sale and support ongoing operations.

The DIP financing includes $22.5 million in new money and a rollup of $67.5 million of Sientra’s prepetition debt.

Deerfield Partners, LP is the administrative and collateral agent.

Interest is SOFR plus 700 basis points, payable monthly in cash on new money and in kind on rollup loans.

Fees include 4% on all new-money loans, deducted from new-money loans advanced to the debtors, and a termination payment of 5% on new-money loans, payable at maturity or prepayment.

The financing is set to mature on July 11.

Bid procedures

Under the company’s proposed bid procedures, the deadline to choose a stalking horse bidder would be March 8, and the deadline to submit qualified bids would be 5 p.m. ET on March 18.

An auction would take place on March 28, a sale hearing would occur on April 5, and the deadline to close a sale would be April 12.

The company is seeking approval to provide bid protections to any potential stalking horse bidder, including a 3% breakup fee and a $500,000 expense reimbursement.

Other details

In its petition, the company listed $139.93 million in assets and $171.98 million in debt.

Its largest unsecured creditor is Simatrix, Inc., based in Chicago, with a $1.37 million trade claim. No other creditors were listed with unsecured claims of $1 million or more.

Kirkland & Ellis LLP and Pachulski Stang Ziehl & Jones are serving as legal counsel, Stifel/Miller Buckfire is serving as investment banker, and Berkeley Research Group, LLC is serving as financial adviser.

The medical aesthetics company is based in Irvine, Calif. The Chapter 11 case number is 24-10245.

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