In an email to shareholders (apparently those still exist), the company said it would formally dissolve, and would seek to pay unsecured creditors its remaining cash in coming months.
The company's overdue end comes after the feds filed criminal charges against Theranos founder, and frequent Clinton Global Initiative guest and speaker, Elizabeth Holmes and the blood-testing company's former No. 2 executive, alleging that they defrauded investors out of hundreds of millions of dollars and defrauded doctors and patients.
The trigger for the dissolution was Theranos' breach of a covenant governing the $65 million loan it received from Fortress last year. Under the loan terms, Fortress was entitled to foreclose upon the company's assets if its cash fell beneath a certain threshold.
In the email to shareholders, sent Tuesday, Theranos General Counsel and Chief Executive Officer David Taylor said the company is trying to negotiate a settlement with Fortress that would give the New York private-equity firm ownership of the company's patents but leave its remaining cash—estimated at about $5 million—for distribution to other unsecured creditors.
Under a liquidation process known as "an assignment for the benefit of creditors," getting that remaining cash to the unsecured creditors could take six to 12 months, Taylor said in the email.
And so the company that was once valued in the billions is now fighting to preserve a few million for other creditors upon liquidation. The "value" left over for equity? $0.
Not that anyone was expecting more: most of Theranos's remaining two-dozen employees worked their last day on Friday, Aug. 31. Only the General Counsel and a handful of support staff remain on the payroll for a few more days.
Theranos' liquidation followed a failed attempt to sell the company, when over four months Jefferies reached out on Theranos's behalf to more than 80 potential buyers, and executed nondisclosure agreements with 17 of those parties, the email said, adding: "We assisted those parties with diligence and had numerous follow-on conversations."