đ„$51 Trillion ... Dollarsđ„
23andMe Holding Co. ($MEHCQ), Luminar Technologies Inc. ($LAZR) + ModivCare Inc. ($MODVQ)
âĄUpdate: 23andMe Holding Co. ($MEHCQ)âĄ
Holy hell, what has been happening in 23andMe Holding Co. ($MEHCQ) (n/k/a Chrome Holding Co.)* and its 11 affiliatesâ (collectively, the âdebtorsâ) bankruptcy cases?
Regular readers of PETITION will know that, on June 27, 2025, Judge Walsh approved the debtorsâ sale of substantially all of their operating assets (except telehealth platform Lemonaid) to former CEO Anne Wojcickiâs TTAM Research Institute (âTTAMâ) (n/k/a 23andMe Research Institute) for $302.5mm.** But if you need a refresher, you can find it here:
Following that sale, the debtors seemed poised to confirm a chapter 11 plan, which, for another $2.5mm, would send Lemonaid over to TTAM too, fairly quickly. Heck, theyâd even agreed with the official equity committee (the âOECâ) on a $2.55mm fee cap ⊠subject to the effective date occurring by September 30, 2025. But things have gone awry and âŠ
Hereâs, um, the biggest problem, pulled directly from the debtorsâ disclosure statement (the âDSâ):
Now thatâs an utter sh*tload of claims.
And wading through that morass ainât the only thing the debtors have been putting up with. For starters, the ever âprotectiveâ State of California and a gaggle of lawyers, physicians, bioethicists, etc. that call themselves âCAVEATâ are still litigating and trying to get the TTAM sale overturned on appeal in the district court.
Plus, folks who settled prepetition arenât ⊠lol, đ ⊠happy with that decision after the purchase price cleared. Specifically, on September 4, 2025, the debtors filed a motion to assume their eve-of-bankruptcy-March-â25-settlement-agreement relating to customers who opted to arbitrate their â23 cybersecurity breach claims with counsel Labaton Keller Sucharow LLP, Levi &, Korsinsky LLP, and Milberg Coleman Bryson Phillips Grossman PLLC (collectively, âarbitration settlement counselâ). And despite having signed up for the deal, the terms of which are redacted â and sadly, debtorsâ counsel Paul, Weiss, Rifkind, Wharton & Garrison LLP didnât spill the beans (again!) â arbitration settlement counsel wants to renege. Hereâs its, LOL, âargumentâ:
â⊠the significant change of circumstances following the commencement of these Chapter 11 Cases and the successful sale of the Debtorsâ assets means that the terms of the prepetition Settlement Agreement between Arbitration Counsel (not the Arbitration Claimants) and the Settling Debtors are no longer fair or equitable to the Arbitration Claimants.â
Tough. Sh*t. Yâall. Shouldâve, we dunno, drafted around the possibility the assets would sell for more than expected. You be lawyers, right? Anyway, Judge Walsh apparently agrees with our take because after a 5.75-hour hearing on September 25, 2025, he orally granted the motion a day later.
But the hearing wasnât limited to the assumption motion.
The debtors also sought preliminary approval of a settlement with a non-arbitrating data breach class, which would give âem â⊠a minimum allowed claim of $30 million and capped by a cash outlay of $50 million,â which â⊠closely tracks the [$30mm] prepetition settlement agreed to by the Parties and preliminarily approved by Judge Chen in the MDL.â Or put another way, a 0.1% recovery on the $48 billion class claim filed.
And while the OEC objected to the settlement because there are obvious issues to be worked out (like the final amount to be paid, although, like the OEC, weâd bet itâs the full $50mm) and class members have the option to opt out (subject to the debtorsâ walk-right if more than 2% of them do so), the court deferred to the debtorsâ business judgment and granted that ask too.***
The last topic taken up by the court was approval of that DS quoted âŹïž. The underlying plan itself is straightforward enough: despite having fourteen separate classes and a currently ungodly number of claims to process before distributions can really begin, it creates a trust and pays out claims under a waterfall,**** with any leftover value flowing to equity (through interests in a trust). But thereâs one change thatâll give the debtors a bit more cash to play with. While the plan still contemplates selling Lemonaid, TTAM ainât the buyer no more. Following the closing of the prior sale, Bambumeta Ventures, LLC popped onto the scene and one-upped its $2.5mm bid, offering a 4x greater $10mm. Naturally, the debtors are going to net the higher pot.
In any event, the court orally approved the DS at the hearing and will be sending the debtors out to solicit as soon as they get him revised materials that incorporate his comments, as well as, presumably, post-filing factual developments. The confirmation hearing is slated to go forward on November 19, 2025 at 1:30pm CT.
Prior to that, on November 7, 2025 at 10am CT, the court will take up the debtorsâ objection to ~160k of the potentially fraudulent claims filed.***** Hopefully the debtors are able to get an easy W and get the cases back on track before shareholders notice. While the stockâs still up on the month, itâs trended down ~9.6% from its September 4 close at $4.26 (and ~37.1% from its bankruptcy high of $6.12).
*Post-sale, the debtors changed their name. We have no clue why they landed on âChrome.â
**The sale closed on July 14, 2025.
***The court also preliminarily approved (i) a $3.25mm settlement with class-repping Canadian plaintiffs, which filed a $407mm proof of claim, and (ii) another $3.25mm settlement with a class of plaintiffs which allege the debtorsâ â⊠intercept[ed] and disclose[d]âŠâ their private information using tracking technology and filed $165b in aggregate claims. Because the dollars here are a lot smaller, and the amount certain, no one objected. Curiously, as of writing, none of the orders granting preliminarily granting the settlements have hit the docket.
****KR OP Tech, LLC, the debtorsâ landlord under a now-rejected lease, objected to the DS and will object to the plan on the basis that, where you end with a solvent debtor, as is (probably) the case here, the 502(b)(6) cap on lease rejection damages shouldnât apply. That, along with the US trusteeâs standard objection to opt-out releases, will be taken up at confirmation.
*****Weâd typically link the objection in-line, but itâs 9.4k pages long. If you really want it, itâs here.
â©One to Watch: Luminar Technologies Inc. ($LAZR)â©
Luminar Technologies Inc. ($LAZR) (âLuminarâ or the âcompanyâ) is an Orlando, FL-based vehicle sensor and software maker that develops Light Detector and Ranging (Lidar) technology for driver assistance systems and autonomous vehicles; its technology is used in passenger and commercial vehicles, but also has industrial, logistics, defense, and aerospace applications. The company counts a number of large OEMs as customers, i.e., The Volvo Group ($VOLV B)(âVolvoâ), Nissan Motor Co Ltd ($NSANY), Mercedes Benz Group ($MBGYY), Tesla Inc. ($TSLA), and Caterpillar Inc ($CAT) â but only Volvo has moved beyond testing to actually using Luminarâs product in standard production for one of its cars. Still, all of this is pretty impressive for a company founded in â12 by 17-year-old Stanford drop-out, Austin Russell!*
At base, Lidar works similarly to sonar or radar systems, but uses infrared light, instead of sound or radio waves, to map out the surrounding environment. Luminar differentiates itself from its competitors by offering a more premium product that operates on a different wavelength and can detect objects much farther away and in worse weather conditions. Longer perception distances enable the technology to be used at higher speeds, which is critical for advancing both driver assistance systems and autonomous driving. To create these higher performing Lidar systems, the company builds its product from the chip-level up, rather than using off-the-shelf components like some of its lower cost competitors.
Which is, of course, expensive âŠ
The company loses money on every sale it makes â even before operating expenses and even as it has grown over time.
To mitigate its losses, the company has been working to streamline its operations and restructure. In April â24, it unveiled its next generation wholly-unoriginally-named product, đ, the Luminar Halo, promising improved performance, integration and cost. It intends to move all its customers to the new Halo, which it claims will be designed to meet all or most of its customerâs requirements without necessitating the customization it has been doing for each customer on its previous generation Iris and Iris Plus products. It plans to start producing the Halo by â27.
Additionally, Luminar has been in full-on operational restructuring mode. In May â24, the company fired approximately 20% of its staff, began subletting certain facilities, and reduced contractor spend. In September, Luminar initiated a second round of layoffs, bringing its cumulative cuts to 30% of staff as of the beginning of â24. The company estimated that these actions would generate $100-110mm of annualized cash savings.
It wasnât done. In March â25, the company initiated even more lay-offs and began to wind-down its data and insurance business, launched a year earlier, for an estimated annual savings of $23mm.
The cuts have finally begun to stem Luminarâs tremendous cash outflows, but it is still burning through an average of $49mm per quarter this year.
The company projects that its actions will bring down its operating expenses to $30mm per quarter by the end of â25 with additional improvements expected in â26 from exiting its data and insurance business.
But its outlook for the top line was less rosy. After sales declined 8% in 1H25 due to both the loss of data and insurance revenue and a decline in the number of sensors shipped, the company cut its full year revenue forecast for the same reasons. It lowered its revenue projection from $82-90mm (+10-20% growth) to $67-74mm â meaning it will possibly be the first year of revenue decline since becoming public.
Luminar has been funding its cash incineration program through a combination of debt and equity issuances. Early on, it raised venture capital from Canvas Ventures, GVA Capital and 1517 Fund, and received strategic investments from Volvo and Daimler Truck Holding AG ($DTRUY).
In December â20, Luminar went public and raised $406mm via a de-SPAC transaction. It also raised an additional $184mm from a consortium of other institutional investors. The stock price peaked at around $42/share, making Russell briefly the youngest self-made billionaire, at least on paper, before steadily falling back to earth as the hype around autonomous vehicles faded away.
The company has continued to raise money in public equity markets, garnering $89mm from equity issuances in FY24 and a further $22mm in 1H25; it intended to raise even more from public suckers investors this year, but was unable to do so after failing to timely file financial statements with the SEC.
In May â25, Luminar announced a convertible preferred deal with Yorkville Advisors Global and an unnamed second investor under which it could issue â subject to certain closing conditions â up to $200mm of series A convertible preferred stock (âconvertible prefâ) in increments of up to $35mm at 96 cents on the dollar, every 60-90 days over the subsequent 18 months. The company issued $35mm at that time and has $165mm of capacity remaining.
The company has also turned to debt markets to fund its operations.
In December â21, the company issued $625mm of 1.25% convertible senior notes due December â26 with a conversion price of $299.70/share (the ââ26 convertsâ). As the stock has sunk lower and the maturity date draws nearer, the company has sought to address these â26 converts over the course of the last year.
In August â24, Luminar exchanged $422mm of the â26 converts at 65 cents on the dollar â a combination of $82mm of newly issued 9% convertible second lien senior secured notes due â30 (â9% convertsâ) and $192mm of the new 11.5% convertible second lien senior secured notes due â30 (â11.5% convertsâ and together with the 9% converts, the ââ30 convertsâ). At the same time, it issued $100mm of S+900 senior secured floating rate notes due â28 (ââ28 securedsâ) via private placement.
The new â28 secureds and â30 converts have springing maturity features: both will become due in September â26 if more than $100mm of the â26 converts remain outstanding as of June â26. Luminar has said, however, that it hopes to reach this goal of less than $100mm outstanding by the end of â25 and has negotiated another series of transactions to that end.
In March â25, the company exchanged $8mm of â26 converts for equity. In May â25, the company equitized another $6mm of â26 converts and repurchased $44mm of â26 converts for $30mm (69 cents on the dollar).
All of this leaves the company with the following capital structure as of June 30, 2025:
As far as liquidity goes, the company has $51mm of cash on hand and $60mm of marketable securities as of June 30, 2025. It also has an unused $50mm non-recourse credit facility with St. James Bank & Trust Company Ltd. that would be collateralized by Luminar common equity and bear an interest rate of 8%. Additionally, it has the ability to issue $165mm more of its convertible pref and has even gotten certain vendors to agree to be paid in stock rather than cash at Luminarâs option, đ€Ż.
Luminar isnât out of runway (yet), but it also wouldnât be the first Lidar company to fold or go through Chapter 11 â we covered Quanergy Systems Inc.âs bankruptcy back in â22 and â23.
It seems likely able to address its â26 converts in time to avoid triggering the springing maturities on its other debt. But it is still burning through cash at an alarming rate, sales are coming in slower than originally anticipated as the auto industry is potentially entering a period of turmoil, and its CFO Tom Fenimore has said that it may need as much as $100mm of additional capital to reach profitability.
Weâll certainly be keeping Luminar on our radar, đ (#dadjoke), to see how it fares.
*Mr. Russell served as CEO and Chair of the Board until May â25 when he suddenly resigned from those roles ââŠfollowing a Code of Business Conduct and Ethics inquiry by the Audit Committee of the Board of Directors.â đ€š He remains on the Board.
đ„New Chapter 11 Bankruptcy Filing - ModivCare Inc. ($MODVQ)đ„
A month or so back, on August 20, 2025, Denver-based ModivCare Inc. ($MODVQ) (âModivCareâ) and seventy affiliates (collectively, together with ModivCare, the âdebtorsâ) filed chapter 11 prearranged cases in the Southern District of Texas (Judge Perez). We covered this sh*tco in late June âŠ
⊠but to recap, the debtors are â⊠a leading technology-enabled healthcare services company, connecting members to essential care through [non-emergency medical transportation (âNEMTâ)], personal care services (âPCSâ), and remote patient monitoring (âRPMâ).â
Despite serving âmembers,â however, their revenue largely derives from public and private insurance providers â Medicaid, Medicare, managed care organizations, government agencies and insurers.
Beyond that, the debtors generate a pittance through health monitoring systems placed at brick and mortars, community health monitoring services, and a non-controlling JV interest in a company that â⊠maintains a national network of community-based clinicians who provide in-home and on-location services.â
Here are recent financial figs:
But notwithstanding ~$2.8b in revenue and ~$161.1mm in adjusted EBITDA, ModivCareâs stock, in the lead up to the filing, looked like one of its NEMT drivers took it straight off a cliff.
Weâll let chief restructuring transformation officer and first day declarant Chad Shandler (of FTI Consulting, Inc. ($FCN)) provide more detail:
âDespite the strength and societal importance of its platform âŠâ
⊠which is, for all intents and purposes, uh, ride share âŠ
â⊠ModivCare is weighed down by approximately $1.4 billion in funded debt, substantial annual interest expense, and persistent cash flow pressure. ModivCare reported a net loss of $201.3 million in 2024 and negative free cash flow of $34.0 million, and in the first quarter of 2025, revenues declined nearly 5% year-over-year, with adjusted EBITDA of $32.6 million. The Companyâs revolving credit facility is fully drawn, including $75 million principal coming due and owing in January 2026, and its leverage ratio is unsustainable.â
Here are the petition date debt stack deets:*
The incremental term loan and second lien notes were issued back in Q1 this year, generating ~$105mm in new capital,** and, per Mr. Shandler, absent âem â⊠and their incremental critical liquidity, the Company may have been forced to commence these Chapter 11 Cases âŠâ back then. Weâve heard that one before ⊠and still donât believe limping along for another couple quarters is anything to brag about.
Anyway, back to Mr. Shandler:
âDuring the first half of 2025, and through July of 2025, the Company has continued to experience operational challenges, including non-renewals from certain key customers, delays in key customer repricing, increased volume of per-member rides under shared- risk contracts[], and the Debtorsâ failure to transition to fee-for-service contracts.â
In July â25, the debtors got active and commenced negotiations with a group of first lien lenders and second lien noteholders (the âconsenting creditorsâ) and simultaneously looked for equity investments and to sell the PCS and RPM businesses. As you now know, neither of those went anywhere.***
But not everything was a total waste of time. The debtors filed with a restructuring support agreement (âRSAâ) in hand, which, if consummated, provides a $1.1b+ deleveraging and contemplated:
đDIP Financing. $100mm in DIP financing ($62.5mm interim), with pre-baked agreement to roll the claims into an exit term loan (the âexit TLâ). The DIP bears interest at SOFR + 7% and has a backstop premium of 20% of the reorg equity (the âbackstop premiumâ), a 2% OID fee, and a 3% exit fee.
đRestructuring:
First Lien Claims. Holders of first lien claims will exchange their claims for up to $200mm of the exit TL and 98% of the reorg equity, subject to dilution by the DIP backstop, the equity rights offering đ, the warrants đ, and an 8% management incentive plan.
Second Lien Claims. Holders of second lien notes will receive for 2% of the reorg equity, subject to the same dilution, and three sets of five-year warrants to acquire 15% of the reorg equity (one 15% set at an implied enterprise value of $971mm, another at ~$1.06b, and the last at ~$1.15b), each subject to the subsequent warrants and the MIP.
General Unsecured Claims. Holders of GUCs will receive the right to purchase up to $200mm of reorg equity, at a valuation that would pay off 100% of first lien claim and 75% of second lien claims.
Equity. Each share of equity in ModivCare will receive a gluten-free đ©.
đExit Revolver. The debtors have permission to enter into, but no committed financing for, a senior $250mm exit revolver ⊠which, um, is an issue.
đTimeline. The RSA contemplates the following timeline:****
The court held a 1.75-hour-long first-day hearing on August 21, 2025, at which all requested relief was granted, and scheduled the second-day hearing for September 16, 2025 ⊠which was subsequently pushed to today, September 30, 2025, at 3pm CT after the official committee of unsecured creditors (the âUCCâ), repped by White & Case LLP (âW&Câ), popped onto the scene.
Not that accommodations bought the debtors or the consenting creditors anything. On September 23, 2025, the UCC filed an archetypal W&C DIP objection, including this bombastic assertion:
â⊠[T]he Backstop Premium is worth $154.9 million assuming an illustrative total enterprise value of $1.2 billion (the approximate sum of the first and second lien debt that participated in the Debtorsâ March 2025 liability management transaction), and potentially much more if the Debtorsâ business proves to be more valuable.â
Which, we get it, valuation hasnât been proven (yet), but the debtorsâ 1Qâ25 10-Q suggested, nearly five months ago when the second lien notes totaled ~$301.2mm, that ~$155mm value âïž is more horsesh*t than âillustrativeâ:
âAs of March 31, 2025, the fair value of the Second Lien Notes was $120.5 million âŠâ
The UCCâs math ainât gonna math (PETITION NOTE: the day before the hearing, on September 29, 2025, the debtors and the consenting creditors***** filed replies â and a revised proposed final DIP order).******
Regardless, folks can hash it out with Judge Perez later today. Thereafter, the disclosure statement (the âDSâ) hearing is slated for October 6, 2025 at 9am CT, which is an irrelevant couple days after the timeline âïž. In any event, who knows if the date will stick; before long, the UCC will object.
Not that it will receive the honors of being first. On September 29, 2025, Christopher Skrypski (the âproposed lead plaintiffâ), on behalf of himself and a proposed class of duped shareholders, filed an objection to the DS. Back in January â25, ModivCare, CEO Heath Sampson, NEMT-segment CFO Kenneth Shephard, and debtor-wide CFO Barbara Gutierrez (together with Messrs. Sampson and Shepard, the ânon-debtor defendantsâ) were sued for making false and misleading statements to investors that inflated the share price,******* and because the RSA-documenting plan contains a third-party release of âem, the proposed lead plaintiff poses a simple question:
Would any rational, fully informed Class Member ever voluntarily release direct claims against the insured Non-Debtor Defendants, their only potential source of recovery, in exchange for absolutely nothing?
So, in addition to asking for class lit-focused disclosures, the objector requests that the class be carved out of the release or the proposed lead plaintiff be permitted to opt out for everyone.
The debtors are represented by Latham & Watkins LLP (Ray Schrock, Keith Simon, George Klidonas, Betsy Marks, Jonathan Weichselbaum, Montana Licari, Meghana Koenitzer, Nikhil Gulati, Brian Herskowitz, Esteban Woo Kee) and Hunton Andrews Kurth LLP (Timothy âTadâ Davidson II, Catherine Rankin, Brandon Bell) as legal counsel, FTI Consulting, Inc. ($FCN) (Chad Shandler) as financial advisor and CRO, and Moelis & Company LLC ($MC) (Zul Jamal) as investment banker. The debtorsâ âstrategic alternatives committeeâ is composed of Alec Cunningham, Erin Russell, and Daniel Silvers, and Mr. Silvers composes its special committee, which is represented by Quinn Emanuel Urquhart & Sullivan LLP (Susheel Kirpalani) as legal counsel. The first lien agent, which is currently JPMorgan Chase Bank, N.A. ($JPM), but â⊠will be replaced by Wilmington Trust National Associationâ and the consenting creditors are represented by Paul Hastings LLP (Kris Hansen, Matt Warren, Lindsey Henrikson). Wilmington Savings Fund Society, FSB, as second lien notes trustee, is represented by Winston & Strawn LLP (Jonathan Levine, Tom Good, Emma Fleming, Madison Haueisen). The UCC is represented by W&C (Scott Greissman, J. Christopher Shore, Jason Zakia, Andrew Zatz, Gregory Pesce, Charles Koster) as legal counsel and AlixPartners LLP (David MacGreevey) as financial advisor. The proposed lead plaintiff is represented by Lowenstein Sandler LLP (Andrew Behlmann, Michael Papandrea, Lindsay Sklar) and Levi & Korsinsky LLP (Gregory Potrepka, Shannon Hopkins) as legal counsel.
*The debtors also have ~$123.9mm in trade claims outstanding.
**Kirkland & Ellis LLP represented the debtors in connection with those debt issuances, but Latham & Watkins LLPâs Ray Schrock was able to snake the restructuring work.
***In FYâ24, PCS and RPM reported $2.1mm and $1.8mm in operating income before giving effect to a $105.3mm impairment of the latterâs goodwill. FYâ25 ainât off to a great start either; for 1Qâ24, PCS reported $2.3mm in operating income, while RPM had, đŹ, ($1.0mm).
****The debtors filed the disclosure statement and plan on September 4, 2025. Nothing special about either: they document the RSA deal.
*****Feel free to file a 2019 statement any time.
******We wonât comment on the rest of the objection. Other beefs are more reasonable (e.g., the debtorsâ borrowing interest-accruing cash now to escrow professional fees, case timeline) or at least understandable (e.g., the cap on UCC fees only). Others are vanilla UCC fodder weâd have said ânoâ to too (e.g., no DIP liens on unencumbered assets).
*******Discovery in the underlying lit hasnât commenced, so we ainât gonna comment on the allegations. Regardless, the DS objection resonates.
đResourcesđ
We have compiled a list of a$$-kicking resources on the topics of restructuring, tech, finance, investing, and disruption. đ„You can find it heređ„.
Weâre nerds so weâre actually a bit excited about Andrew Ross Sorkinâs newest title, â1929: Inside the Greatest Crash in Wall Street History and How It Shattered a Nation,â which comes out on October 14, 2025. You can preorder it now.
Another one that is getting a lot of attention that we want to dig in to is âIf Anyone Builds it, Everyone Dies: Why Superhuman AI Would Kill Us Allâ by Eliezer Yudkowsky and Nate Soares. Itâs available now.
đŸCongratulations toâŠđŸ
Eversheds Sutherland (US) LLP (Todd Meyers, Sameer Alifarag, Danielle Barav-Johnson) and Cole Schotz P.C. (Justin Alberto, Michael Fitzpatrick) for securing the legal mandate on behalf of the official committee of unsecured creditors in the US Magnesium LLC chapter 11 bankruptcy case.