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KaloBios Pharmaceuticals, Inc. Files for Bankruptcy Following Shkreli's Dismissal

Posted on in Bankruptcy
KaloBios Pharmaceuticals, Inc. Files for Bankruptcy Following Shkreli's Dismissal

2015 brought us a lot of new celebrity faces. Some were inspiring, some were funny, and others collectively made us sad or even angry. For many Americans, Martin Shkreli, former CEO of KaloBios Pharmaceuticals, Inc., fit into this last category. He is perhaps best known for dramatically raising the per-tablet price of Daraprim, an anti-malarial and antiparasitic, from $13.50 to $750 after his other company, Turing Pharmaceuticals, acquired its patent.

In December 2015, Shkreli was arrested on a securities charge fraud. Following his arrest, he was let go from KaloBios Pharmaceuticals, which then filed for Chapter 11 bankruptcy at the end of that month. Any time an individual or corporate entity has more debt than it can realistically repay, bankruptcy is an option. But it is an option that must be considered and used carefully because it comes with significant obligations for the filing party.

What Happened to KaloBios?

Because the company's directors feared that the fallout from Shkreli's arrest would negatively impact the company's liquidity, they opted to file for Chapter 11 bankruptcy close to the end of the year. Its stocks were removed from NASDAQ and a few of its directors stepped down.
In its bankruptcy documents, KaloBios stated that it has a total debt amount of approximately $2 million and assets worth approximately $8 million.

Now, the company is potentially in a similar position to the position it held before Shkreli joined: unable to turn a profit. Previously, the experimental drug maker was near the point of shutting down because several of its drugs were found to be ineffective. The company was rescued when a group of investors led by Shkreli purchased 70% of its stock, raising its value from $2 per share to $40.

Without Shkreli and now facing significant negative media attention, the company is at the mercy of the bankruptcy court. A hearing regarding the NASDAQ delisting of the company is scheduled for February 25, 2016. Beyond this, hearings about the company's bankruptcy plan have not yet been scheduled. Chapter 11 bankruptcy plans can take time, up to a year or longer, to formulate. Once a plan is developed, it must be approved by the court for the debtor to begin complying with its requirements.

Learn More from an Illinois Bankruptcy Attorney

Bankruptcy is a tool commonly used by companies that are suffering financially to get out of debt. But it can be complicated and nearly always requires stringent efforts on the part of the bankrupt party to repay its debts and satisfy its creditors' demands. When an individual's personal debt spirals out of control, this happens on a much smaller scale. Talk to an experienced bankruptcy attorney if you are feeling like you cannot control your debt and might want to file for bankruptcy in the near future. Our team of Illinois bankruptcy attorneys at Newland & Newland, LLP can guide you through this process and provide you with quality legal representation.

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