Accelerate Diagnostics Files for Chapter 11 Protection and Agrees to Terms to Sell Substantially All Assets

Rhea-AI Summary

Accelerate Diagnostics (NASDAQ: AXDX) has filed for Chapter 11 bankruptcy protection and announced plans to sell substantially all its assets. The company has secured a $12.5 million debtor-in-possession (DIP) financing facility to maintain operations during the proceedings. Accelerate has agreed to terms with Indaba Capital Management, a majority holder of the company's secured notes, for a "stalking horse" bid to acquire its assets. The purchase price includes a $36.9 million credit bid of Indaba's existing secured notes and DIP financing, along with assumed liabilities and excluded cash for company wind-down. The sale process will be conducted under Section 363 of the Bankruptcy Code, allowing for potential higher or better offers through a court-supervised auction.

Positive

• Secured $12.5 million DIP financing to maintain operations during bankruptcy
• Already has a stalking horse bid from Indaba Capital Management
• Sale process allows for potentially higher competing bids through auction

Negative

• Company filed for Chapter 11 bankruptcy protection
• Will sell substantially all assets, indicating end of independent operations
• Current shareholders likely to face significant or total losses

Insights

Financial Restructuring Expert

Accelerate Diagnostics' Chapter 11 filing with $36.9M stalking horse bid likely means significant or total loss for shareholders.

Accelerate Diagnostics has entered Chapter 11 bankruptcy protection with a pre-arranged stalking horse bid from Indaba Capital Management, a majority holder of the company's secured notes. This structured approach to bankruptcy provides some stability but signals serious financial distress.

The bid from Indaba consists of a $36.9 million credit bid (meaning debt forgiveness rather than new cash), assumption of certain liabilities, and some excluded cash for wind-down operations. This transaction structure is particularly significant - Indaba is essentially offering to cancel debt owed to them in exchange for acquiring the company's assets.

To maintain operations during bankruptcy proceedings, Accelerate has secured a commitment for up to $12.5 million in debtor-in-possession (DIP) financing. This provides essential liquidity to continue normal operations, pay employees, and meet vendor obligations during the sale process.

The Section 363 sale process under bankruptcy law enables other potential buyers to submit competing bids, potentially increasing recovery value. However, Indaba's position as both a secured creditor and DIP lender gives them considerable advantage in the auction process.

For shareholders, this development is extremely concerning. In Chapter 11 proceedings, secured creditors have priority claims on assets, and with the purchase price primarily consisting of debt forgiveness rather than new capital, equity holders typically face severe or total investment losses. The court-supervised nature of the process ensures procedural fairness, but the pre-arranged sale to a secured creditor suggests limited expectations for recoveries beyond secured debt obligations.

TUCSON, Ariz., May 8, 2025 /PRNewswire/ -- Accelerate Diagnostics, Inc. (Nasdaq: AXDX) ("Accelerate" or the Company") today announced that it has voluntarily initiated a Chapter 11 restructuring proceeding in the United States Bankruptcy Court for the District of Delaware ("Bankruptcy Court") and will seek to sell its assets through a court supervised sale process.

Accelerate has filed various "first day" motions with the Bankruptcy Court requesting customary relief that will enable the Company to transition into Chapter 11 without material disruption to their ordinary course operations, including seeking authority to obtain debtor-in-possession ("DIP") financing and pay employee wages and benefits.

DIP Financing

To provide necessary funding during the Chapter 11 proceeding, Accelerate has received a commitment of up to $12.5 million in a multi-draw DIP financing facility. Upon approval by the Bankruptcy Court, the DIP financing is expected to provide Accelerate with the necessary liquidity to operate in the normal course and meet obligations to its employees, vendors and customers throughout the Chapter 11 proceeding while executing on the sale process.

Sale Process

Prior to the Chapter 11 filing, and subject to Bankruptcy Court approval, the Company agreed to terms with Indaba Capital Management ("Indaba") – a majority holder of the Company's prepetition secured notes -- to acquire substantially all the assets of the Company.  The purchase price of Indaba's "stalking horse" bid includes (i) a credit bid of $36.9 million of Indaba's existing secured notes and DIP financing facility, (ii) certain assumed liabilities, and (iii) excluded cash sufficient to wind-down the Company following sale closing.  The transaction is part of a sale process under Section 363 of the Bankruptcy Code that will be subject to compliance with agreed upon and Bankruptcy Court-approved bidding procedures allowing for the submission of higher or otherwise better offers, and other agreed-upon conditions. In addition, the transaction is subject to customary closing conditions. In accordance with the sale process, notice of the proposed sale to Indaba will be given to third parties and competing bids will be solicited. The Company will manage the bidding process and evaluate any bids received, in consultation with its advisors and as overseen by the Bankruptcy Court.  In the event additional qualified bids are received, the Company will conduct an auction for the sale of its assets.  If no other qualified bids are received, Indaba will be deemed the successful bidder.

Accelerate is represented by Fried, Frank, Harris, Shriver & Jacobson LLP as counsel, Solic Capital as financial advisor and Perella Weinberg Partners L.P. as restructuring investment banker.

Additional information about the Chapter 11 case, including access to Bankruptcy Court documents, is available online at https://cases.stretto.com/AccelerateDiagnostics.

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SOURCE Accelerate Diagnostics, Inc.

FAQ

Why did Accelerate Diagnostics (AXDX) file for Chapter 11 bankruptcy?

Accelerate Diagnostics filed for Chapter 11 bankruptcy protection to facilitate the sale of substantially all its assets through a court-supervised process while maintaining operations through DIP financing.

What is the value of Indaba's stalking horse bid for AXDX assets?

Indaba's stalking horse bid includes a $36.9 million credit bid of existing secured notes and DIP financing, plus assumed liabilities and excluded cash for company wind-down.

How much DIP financing did Accelerate Diagnostics secure?

Accelerate Diagnostics secured a commitment of up to $12.5 million in a multi-draw DIP financing facility to maintain operations during the Chapter 11 proceedings.

What happens to AXDX shareholders in this bankruptcy?

In Chapter 11 bankruptcies where substantially all assets are being sold, shareholders typically face significant or total losses as they are last in line for any remaining value after creditors are paid.

Can other companies bid on Accelerate Diagnostics' assets?

Yes, the Section 363 sale process allows for competing bids from other parties, with the possibility of an auction if additional qualified bids are received.