Digital health company Babylon filed for bankruptcy protection for two of its U.S. subsidiaries last week, according to filings in U.S. Bankruptcy Court in Delaware. Babylon is seeking Chapter 7 relief, which means it plans to liquidate assets rather than attempt to restructure.
The filings, which are dated August 9, are for two related entities: Babylon Inc. and Babylon Healthcare Inc. Both entities list hundreds of creditors, however Babylon has indicated that only secured creditors, where the debt is backed by collateral, have a shot at getting paid. Babylon chief operating officer Paul-Henri Ferrand, who signed the filings, selected a checkbox that says: “After any administrative expenses are paid, no funds will be available for distribution to unsecured creditors.”
Babylon CEO Ali Parsa and the Babylon press team did not respond to a request for comment. Babylon has at least three other U.S. subsidiaries incorporated in Delaware. A search of federal court filings did not locate any bankruptcy filings for these other entities. Ferrand’s Babylon email address bounced back when contacted by Forbes. The role of chief operating officer was among the titles Babylon had said would be eliminated in a WARN notice filed with the Texas Workforce Commission. Forbes reported last week that Babylon closed its headquarters on August 7, laid off U.S. employees and abruptly canceled patient appointments.
The U.K.-based company, which went public in a 2021 SPAC deal, has been struggling for months to secure financing for its business. The liquidation of Babylon’s U.S. operations comes after a previously announced “business combination” with Switzerland-based digital therapeutics company MindMaze — brokered by Babylon creditor AlbaCore Capital — fell through. Forbes previously reported that Babylon is also “winding down” its operations in Rwanda, where it was serving 2.8 million patients.
The filings do not specify the total amount that Babylon owes its U.S. creditors. However, a press release Babylon issued on August 7 said that the proceeds of any third party sales were “not expected to exceed the total amount of the Group’s indebtedness to AlbaCore,” meaning Babylon shareholders would not receive any funds. As of May 2023, Babylon owed AlbaCore, a European investment firm, around $300 million in principal on loans due in 2026, as well as an additional secured bridge loan for up to $34.5 million. AlbaCore did not immediately respond to a request for comment.
At the end of December 2022, Babylon recorded a net loss of $221.4 million on global revenue of $1.1 billion. In the first quarter of 2023, the company had $77.7 million of cash and cash equivalents with $52.1 million of that being held for the pending sale that fell through. The New York Stock Exchange suspended trading and delisted Babylon at the end of June.
In the bankruptcy filings, COO Ferrand checked a box indicating Babylon’s assets and liabilities are between $100 million and $500 million. Babylon has a deadline of August 24 to file documents outlining its secured and unsecured debtors and summaries of assets and liabilities. According to the docket, a meeting of Babylon’s creditors is scheduled for September 12.
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