Amidst its bankruptcy proceedings, Sientra Inc., the breast implant manufacturer, has secured a significant lifeline in the form of court approval for a $90 million Chapter 11 loan provided by Deerfield Partners LP. This injection of funds aims to bolster the company’s efforts to sell its business, following its recent filing for bankruptcy protection.
The announcement of this financial support has sparked a remarkable surge in Sientra’s stock, with shares skyrocketing by over 280% today, reflecting investor optimism surrounding the company’s potential turnaround.
At the time of this publication, Sientra Inc stock (SIEN) has witnessed a surge.
Sientra Inc
Current Price: $0.69
Change : +0.51
Change (%): (283.78%)
Volume: 89.0M
Source: Tomorrow Events Market Data
Judge John Dorsey granted interim approval to the loan on Wednesday, signaling a pivotal development in Sientra’s restructuring efforts. The loan not only injects $22.5 million in new capital but also consolidates up to $67.5 million in existing company loans, a common provision known as roll-ups in bankruptcy financing. This maneuver effectively prioritizes existing debt repayment alongside newly lent funds, streamlining the Chapter 11 repayment process.
With this Chapter 11 financing in place, Sientra gains vital liquidity to sustain its operations as it navigates the sale process. Nicole Greenblatt, representing Sientra in court, noted during the company’s initial hearing that there have been additional expressions of interest in acquiring the business since the bankruptcy filing on Monday.
Wednesday’s ruling ensures immediate access to $9 million of the approved loan, as outlined in court documents. The company plans to seek further approval from Judge Dorsey in subsequent hearings to access the remainder of the bankruptcy financing, a standard procedure in Chapter 11 proceedings.
Sientra Inc had filed for bankruptcy protection in Delaware. The company, headquartered in Irvine, California, found itself grappling with a confluence of challenges, including shifting consumer spending behaviors and the impact of rising interest rates.
CEO Ron Menezes outlined in court documents the various obstacles the company faced, particularly highlighting the disruptive effects of the Covid-19 pandemic.
Initially, Sientra encountered setbacks as elective surgeries, including those involving breast implants, were curtailed or canceled due to pandemic-related restrictions. However, a subsequent surge in demand for cosmetic procedures, dubbed the “Zoom Boom,” provided a glimmer of hope for the company’s recovery. Unfortunately, this momentum was short-lived, as economic uncertainty prompted consumers to tighten their purse strings once again.
Beyond the pandemic-induced challenges, Sientra grappled with internal issues, including high turnover within its sales team and manufacturing problems related to its implants. These difficulties, coupled with mounting losses, led the company to explore potential sale options, albeit without success.
Sientra Inc’s successful acquisition of the Chapter 11 loan not only provides crucial financial stability but also signifies a pivotal step forward in its journey towards restructuring and eventual recovery.
