Teledentistry aligner company Smile Direct Club has filed for Chapter 11 bankruptcy, it has announced.
In its petition, it listed $499 million of assets and more than $1 billion of liabilities.
This comes four years after raising $1.35 billion in an initial public offering. The Chapter 11 filing will allow the company to continue to operate while it creates a plan to repay its creditors.
Smile Direct Club voluntarily filed for Chapter 11 bankruptcy in order to implement ‘a comprehensive recapitalisation transaction’, it claims. It intends for this transition to bolster its balance sheet and allow the company ‘to thrive as an international oral care leader for many years to come’.
As part of the company’s reorganisation, its founders will invest at least $20 million into the company.
Since Smile Direct Club’s initial success which made its founders billionaires, the company has not managed to obtain profit due to declining revenues.
This also followed a patent war with rival Candid Care CO, as well as the impact of the COVID-19 pandemic which reduced sales.
The Chapter 11 filing only affects the US affiliate of Smile Direct Club, lawyers have confirmed. In a letter sent to Dentistry, Smile Direct Club’s solicitors confirmed that the ‘UK affiliate and all of its other international affiliated entities have not sought any bankruptcy protection nor will they’. The letter continued: ‘The operations of the UK entity and all other international affiliated entities remain fully operational, serving both existing and future customers without interruption.’
‘Excited about the future ahead’
Following the Chapter 11 announcement on September 29, David Katzman, CEO of Smile Direct Club said: ‘At Smile Direct Club, we are committed to delivering a premium customer experience and helping over two million customers achieve a smile they love.
‘We are taking this step today to help ensure we are well positioned to build upon the success of our Smilemaker Platform and Careplus offering and to continue our mission of providing safe, convenient, and effective oral care to our customers.
‘This transaction is designed to ensure our future financial structure reflects the talent of our team members and the quality of our business, and I am excited about the future ahead.
‘I look forward to continuing to work alongside leadership and our talented team to transform smiles with the reliability and quality our customers deserve.’
UPDATE: This story has been updated to reflect the fact that Smile Direct Club’s UK arm has not sought any bankruptcy protection.
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