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ProSomnus files Chapter 11 bankruptcy to reorganize
Pleasanton, CA 2024: ProSomnus Inc. filed for Chapter 11 bankruptcy on May 7th less than 18 months after it debuted as a public company via a combination with a special-purpose acquisition company.
• The company, which makes a mouthguard-like device to treat sleep apnea, listed $26.3 million of assets against $52.9 million of debts in its bankruptcy petition filed on Delaware
• It’s seeking up to $13 million of debtor-in-possession financing to fund itself in bankruptcy
• The company’s restructuring plan, which is subject to court approval, calls for giving equity in the reorganized company to existing creditors
Company will move from being Publicly listed to Private Equity
In connection with this process, the Company has secured the support of multiple existing key investors and lenders under a plan that is designed to deliver an aggregate of approximately $20 million of new capital into the Company. Such Capital will support ongoing operations and the development of strategic initiatives including the company’s next generation sensor device.
Minimal Anticipated Impact on Business Operations
ProSomnus says in a press announcement that the terms of financial restructuring will enable the company to maintain normal business operations for customers and suppliers during and after this restructuring process.
The company expects that customers will keep experiencing fast turnaround times and consistent, timely order fulfillment. ProSomnus intends to keep buying supplies from vendors at levels that match the demand for its devices.
Sponsoring noteholders include investment funds CrossingBridge Low Duration High Yield Fund, Destinations Low Duration Fixed Income Fund, Intrepid Income Fund, Cohanzick Absolute Return Master Fund, Leaffilter North Holdings, Destinations Global Fixed Income Opportunities Fund, RiverPark Strategic Income Fund, Cedarview Opportunities Master Fund, SMC Holdings II and Cetus Capital VI.
The sponsoring noteholders also committed to provide exit financing consisting of about $9 million new capital with a purchase of new equity.
ProSomnus was established in 2006 as DTI Holdings Inc. and MicroDental Inc., which operated a chain of dental laboratories. The lab businesses were sold in October 2016 and ProSomnus Sleep Technologies was formed to operate a sleep apnea business that the company started in 2014. The company went public in a de-SPAC transaction in December 2022.
Sources:
Bloomberg Law Ex-SPAC Sleep Apnea Device Maker ProSomnus Files for Bankruptcy
Yahoo Finance https://finance.yahoo.com/news/prosomnus-sleep-technologies-takes-strategic-005300948.html