Timber Pharmaceuticals officially filed for Chapter 11 bankruptcy protection on Friday afternoon, following the rejection by shareholders to approve a proposed merger with LEO Pharma. The pharmaceutical company, specializing in dermatology drugs, submitted the bankruptcy filing in a Delaware court, citing assets of no more than $10 million and liabilities equal to or exceeding that amount, as reported by Bloomberg after the market’s close.
The decision to file for Chapter 11 protection came after Timber Pharmaceuticals revealed in an SEC filing on Friday afternoon that the planned merger with LEO Pharma failed to secure the necessary majority of shareholder votes during a special shareholders meeting. Trading of Timber’s stock, which had seen a 17% increase, was abruptly halted for pending news at approximately 12:40 p.m. Eastern Time.
Analysts had anticipated the possibility of Timber Pharmaceuticals resorting to bankruptcy if shareholders did not greenlight the merger, primarily due to the company’s lack of funds to repay the bridge loan extended by LEO Pharma in anticipation of the merger.
LEO Pharma had proposed a substantial offer of $14 million for Timber, along with a contingent value right (CVR) valued at up to $22 million. However, payment of the CVR was contingent upon specific deductions related to the 50% repayment of a $3 million bridge loan provided by LEO Pharma.
The merger agreement between Timber Pharmaceuticals and LEO Pharma was initially unveiled in August, but it encountered a setback when it failed to garner sufficient shareholder support at a special meeting convened in October.
The rejection by shareholders and subsequent bankruptcy filing have had immediate repercussions on Timber Pharmaceuticals’ stock value, leading to a sharp decline in trading activities on the day of the announcement. The pharmaceutical industry is now closely monitoring the unfolding situation as Timber navigates the complexities of Chapter 11 proceedings.
At the time of this publication, Timber Pharmaceuticals Inc stock (TMBR) has witnessed a decline.
Timber Pharmaceuticals Inc
Current Price: $0.41
Change : -1.05
Change (%): (-72.18%)
Volume: 364.9K
Source: Tomorrow Events Market Data
Timber Pharmaceuticals’ decision to seek bankruptcy protection underscores the challenges faced by the company in executing its strategic plans and overcoming financial hurdles. As the legal proceedings progress, stakeholders, including shareholders and industry observers, will be closely watching for further developments that may impact the future of Timber Pharmaceuticals and its assets.
