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Startup Theranos To Finally Shut Down

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Theranos Inc., the blood-testing startup whose founder is facing criminal charges, is finally closing down.

The announcement was made by Theranos Chief Executive Officer and General Counsel David Taylor in an e-mail sent to the company's shareholders.

The Wall Street Journal reported that Theranos will formally dissolve and pay its creditors in cash.

According to a copy of the email published on the WSJ website, Taylor said that the investment bank Jefferies reached out on the Silicon Valley company's behalf to more than 80 potential buyers, but none were interested in buying the company.

"We are now out of time. Despite our careful cash management, we are in default under the Fortress credit facility. Fortress has the legal right to foreclose upon, and to sell or take ownership of, all of the Company's assets, including the Company's intellectual property....," Taylor said in the email.

Taylor added that Theranos has started negotiating a settlement transaction that would allow the company to distribute its remaining cash estimated to be about $5 million to its unsecured creditors. In addition to Fortress, Theranos owes at least $60 million to its unsecured creditors.

In June, Theranos said that Elizabeth Holmes has stepped down as CEO and David Taylor was appointed CEO and General Counsel.

Federal prosecutors indicted Holmes on criminal fraud charges for allegedly defrauding investors, doctors and the public as the head of the once-heralded blood-testing start-up that was valued at $9 billion. Holmes was considered a wunderkind of Silicon Valley.

Federal prosecutors also brought charges against the company's former Chief Operating Officer Ramesh Balwani.

The charges stemmed from allegations that Holmes and Balwani engaged in a multi-million dollar scheme to defraud investors, and a separate scheme to defraud doctors as well as patients.

The complaints allege that Theranos, Holmes and Balwani deceived investors into believing that the company's key product - a portable blood analyzer - could conduct comprehensive blood tests from finger drops of blood, revolutionizing the blood testing industry.

In truth, according to the SEC's complaint, Theranos' proprietary analyzer could complete only a small number of tests, and the company conducted the vast majority of patient tests on modified and industry-standard commercial analyzers manufactured by others.

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