23andMe's Genes Not Strong Enough To Avoid Chapter 11

Beleaguered DNA testing biz 23andMe – hit by a massive cyber attack in 2023 – is filing for bankruptcy protection in the US following years of financial uncertainty.

It said that Chapter 11 proceedings were initiated in the US Bankruptcy Court for the Eastern District of Missouri on Sunday, and the court will oversee 23andMe's attempted sale of its assets.

Companies file for bankruptcy protection when they can no longer meet their obligations to creditors. The court will now oversee the sale of 23andMe's assets and ensure they're distributed among creditors.

Filing for bankruptcy protection doesn't necessarily mean the biz will ultimately cease operations, as the sale of assets could be used to pay creditors and continue with a leaner corporate structure.

"After a thorough evaluation of strategic alternatives, we have determined that a court-supervised sale process is the best path forward to maximize the value of the business," said Mark Jensen, chair and member of the Special Committee of the Board of Directors.

"We expect the court-supervised process will advance our efforts to address the operational and financial challenges we face, including further cost reductions and the resolution of legal and leasehold liabilities. We believe in the value of our people and our assets and hope that this process allows our mission of helping people access, understand, and benefit from the human genome to live on for the benefit of customers and patients."

Jensen also affirmed 23andMe's ongoing commitment to safeguarding customer data and stated that data privacy will be "an important consideration in any potential transaction."

23andMe was founded in 2006 but has never turned a profit. Its financial difficulties have been evident for years, but its notorious October 2023 data breach certainly compounded the uncertainty surrounding its finances and long-term prospects.

Its announcement of the filing cited the legal liabilities connected to the attack in 2023 specifically, saying the Chapter 11 proceedings will be used to resolve these.

Among them is the $30 million settlement it agreed in September last year related to a class action lawsuit brought by victims of the cyberattack.

California's attorney general, Rob Bonta, issued an alert on Friday to state residents urging them to download whatever data 23andMe has on them and then request it be deleted by the company.

"The California-based company has publicly reported that it is in financial distress and stated in securities filings that there is substantial doubt about its ability to continue as a going concern," the notice reads.

• 23andMe settles class-action breach lawsuit for $30 million
• UK and Canada's data chiefs join forces to investigate 23andMe mega-breach
• Guess the company: Takes your DNA, blames you when criminals steal it, can't spot a cyberattack for 5 months
• Infosec experts divided over 23andMe's 'victim-blaming' stance on data breach

23andMe awaits the court's decision on its filing. If approved, it will then seek bids for its assets over a 45-day period. If multiple bids are made, then the assets will be auctioned to maximize their value, 23andMe said.

It also plans to operate as normal until the sale is complete. Having secured $35 million in additional liquidity in the form of debtor-in-possession finance, plus the revenue generated through normal commercial operations, 23andMe said it can continue to pay staff and vendors.

The only immediate change to day-to-day operations is that co-founder Anne Wojcicki resigned from her CEO role with immediate effect but will remain on the company's board.

As part of the company's three-person founding team, she had repeatedly tried to take 23andMe private, with the most recent attempt coming in February 2025. Like the two other attempts that came before, it was rejected by the company's Special Committee of the Board of Directors earlier this month.

Wojcicki was the last remaining director after the previous seven all resigned last September, the same month the class action settlement was reached. They were all members of the special committee and, according to a letter penned to the now-former CEO, they resigned over Wojcicki's failed attempts to secure an acquisition. ®