Seeking to restructure or sell its operations, York County-based Unilife Corp. today filed for Chapter 11 bankruptcy protection in Delaware court.
In filing the motion, Unilife said it would look to sell its business but is leaving open the option of continuing operations, according to a company filing with the U.S. Securities and Exchange Commission.
The company’s hopes for restructuring rest on a $7.5 million loan commitment made by ROS Acquisition Offshore LP, an affiliate of OrbiMed Advisors, an investment group that has lent Unilife at least $70 million since 2014, according to earlier CPBJ stories.
The loan, known as a debtor-in-possession financing facility is subject to court approval and would come in two installments: of $1 million and $6.5 million, according to the SEC filing.
The money, combined with cash from operations, is expected to provide the company “sufficient liquidity” during the bankruptcy process to support continuing business operations and minimize disruption, Unilife said. The company’s bankruptcy filing said the DIP financing will fund operations for about 90 days as the company seeks to sell the business through a court auction.
Unilife develops, manufactures and supplies wearable drug-delivery systems, but has been struggling for more than a year to gain solid financial footing.
Chapter 11 bankruptcy protection allows a business to shed debts and reorganize operations.
The company, based in Conewago Township, listed assets of about $83 million and debt of $201 million as of the end of 2016.
Last week, Unilife said negative cash flow and recurring losses put it at risk of not having enough money to continue operations past April 7, according to an SEC filing.
“We have conducted an extensive review of alternatives to address Unilife’s capital structure, and we believe pursuing a balance sheet restructuring or sale through Chapter 11 is the best path forward at this time,” said John Ryan, Unilife’s CEO. “We expect that restructuring Unilife’s balance sheet or the sale of its assets as a going concern through the Chapter 11 process will best position Unilife’s business for future success.”
Unilife currently employs 76 people, according to the bankruptcy filing. The company laid off 51 people as part of last week’s announcement.
In its most recent quarterly earnings report, Unilife said it had a net loss of nearly $18 million for the three months ending on Sept. 30, 2016, down from a loss of $25.9 million for the same period in 2015.
The company has a 165,000-square-foot manufacturing facility located on 38 acres in Conewago Township, which it has been trying to sell. The company also leases 52,000 square feet of office space in King of Prussia to support research and development activities.
Unilife’s foreign affiliates in Australia are not included in the bankruptcy filing but are expected to be included in the restructuring or sale.