Former Silicon Valley darling Elizabeth Holmes’ controversial company Theranos will dissolve after the company ran out of money following scandals including Holmes’ indictment for wire fraud in June.
The blood-testing company owes more than $60 million to unsecured creditors and will take steps toward dissolution starting on Sept. 10, according to a shareholder letter from Theranos CEO David Taylor.
Theranos accepted a $65 million loan from Fortress Investment Group in 2017 under the condition that Theranos would maintain a certain level of cash reserves, reported the Wall Street Journal’s John Carreyrou. Theranos was unable to find a buyer to offset its cash shortage even though it reached out to more than 80 potential purchasers, according to Taylor’s email.
Theranos will try to reimburse its unsecured creditors with what cash it has left, Taylor wrote. Although “most of Theranos’ two-dozen remaining employees” had their last day on the job Friday, Taylor and a few staff members are still on the payroll, reported the WSJ.
Holmes was celebrated by the scientific community for her supposedly revolutionary blood-testing machines that turned out to be much less innovative than she led investors to believe. The WSJ’s Carreyrou documented Stanford University dropout Holmes’ rise and fall in the 2018 book “Bad Blood: Secrets and Lies in a Silicon Valley Startup.”
Company founder Holmes as well as its former President and Chief Operating Officer Sunny Balwani — Holmes’ onetime boyfriend — were indicted on nine counts of wire fraud and two counts of conspiracy to commit wire fraud in June. They could face up to 20 years in prison, according to the WSJ.
Holmes’ company even struck a deal with pharmacy giant Walgreens that boosted its valuation to $9 billion, although Walgreens now says Holmes was deceptive, according to the WSJ. (RELATED: US And UK Scientists Win Million-Dollar Prize For Gene Therapy To Cure Childhood Blindness)
Theranos and its technology first came under suspicion in 2015.
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