A unit of UpHealth filed for bankruptcy after a judge recently ruled the telemedicine provider must pay investment bank Needham & Co. a $31.3 million fee for arranging its 2021 merger with a publicly traded blank-check company, Bloomberg reports.
UpHealth completed a merger with SPAC GigCapital2 in June 2021 at an enterprise value of $1.35 billion and began trading on the NYSE.
UpHealth Holdings filed for Chapter 11 on Tuesday.
The bankruptcy filing follows the Sept. 14 decision by a trial court in New York to grant summary judgment in favor of Needham & Company in a lawsuit unrelated to the parent company’s operations.
UpHealth CEO Sam Meckey said, “Following the summary judgement, we immediately initiated a comprehensive review of our options, and determined that voluntarily filing for Chapter 11 is necessary to mitigate the financial impact of the trial court’s decision. We do not expect this announcement to have any impact on our operations or on the work we are doing to deliver technology-enabled services to our customers. We remain confident in the future prospects of our business, and are taking this proactive step so that we may best protect the interests of our stakeholders and achieve a fair resolution of this matter through an appeals process of the Needham judgment.”
The legal dispute stems from UpHealth Services’ hiring Needham & Company for financial advisory and placement purposes. The trial court in New York issued a decision and order last week, favoring Needham by granting them summary judgment. As a result, the court ruled that Needham is entitled to receive fees totaling more than $31 million plus interest. Read more.
