Vaping company has been working with restructuring advisers amid dispute with FDA
Juul Labs Inc. is expected as soon as this week to start discussions with lenders for financing that would carry the company through a potential chapter 11 bankruptcy filing, according to people familiar with the matter.
The vaping company has received inquiries from lenders and will soon formally request debtor-in-possession financing options, one of the people said. Such financing allows companies to pay day-to-day expenses and remain in possession of their business while under bankruptcy protection.
Bloomberg News earlier reported that Juul was beginning talks regarding possible bankruptcy funding.
The Wall Street Journal reported in June that Juul was working with its legal advisers on options that included a possible bankruptcy filing amid a dispute with the Food and Drug Administration over whether it can keep its e-cigarettes on the U.S. market.
“We will continue the preparation process for both a restructuring and other strategic options as we determine what path is best for our company,” a Juul spokesman said on Tuesday.
The FDA in June ordered Juul’s products off the market, then stayed the decision pending Juul’s appeal.
Thousands of lawsuits have been filed against Juul over the past several years, alleging that the company marketed its e-cigarettes to children. Juul has said it never marketed to underage users.
Juul’s largest shareholder, Marlboro maker Altria Group Inc., decided in September to terminate its noncompete agreement with Juul. Altria’s decision gives Juul more strategic options to secure its business, including the freedom to sell itself—or a significant stake—to one of Altria’s competitors.
Jennifer Maloney – Wall Street Journal – 2022-10-04.
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