KaloBios Pharmaceutical files for bankruptcy

In papers filed at U.S. Bankruptcy Court for the District of Delaware, KaloBios listed total assets of almost $8.4 million and total debts of $1.9 million.

Shkreli, 32, infamous for shepherding Turing Pharmaceuticals to a 5,000 percent price increase of an essential drug, was sacked on December 21 from his position as CEO of KaloBios. Chapter 11 allows a company to reorganize under the protection of the court. At a press conference related to the arrest, Brooklyn U.S. Attorney Robert Capers, explained, “Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company”.

According to court records, University of Miami, Ernst & Young and Lonza Sales Ltd are among the biggest creditors for KaloBios. He’s been arrested for securities fraud, resigned from the boards of at least two companies, been shredded by the punk bands whose label he bankrolled, and even faced calls to return the single existing copy of a Wu-Tang Clan record he paid $2 million for.

Mr. Shkreli is the former chief executive of Turing Pharmaceuticals who was widely criticized when he raised the price of an antiparasitic drug from $13.50 per tablet to $750 per tablet.

On December 28, 2015, the company submitted a request to Nasdaq requesting an appeal of Nasdaq’s decision to delist the Company’s securities.

Health experts were also concerned that Shkreli would try to use the Chagas drug license to take advantage of a Food and Drug Administration voucher system. Will Briganti, a Nasdaq spokesman, declined to comment beyond confirming the date of the appeal.

After his arrest, a Shkreli representative said that it was “no coincidence that the charges… have been filed at the same time of Shkreli’s high-profile, controversial and yet unrelated activities”. Trading of KaloBios stock was halted upon Shkreli’s arrest, both because of his detention and because of the company’s failure to comply with quarterly financial reporting requirements.

Two other directors, Tom Fernandez and Marek Biestek have also resigned from the board of directors. The company’s stock has struggled in recent weeks after former CEO Martin Shkreli stepped down from the company amid allegations of stock manipulation.

KaloBios had taken strategic investment from Shkreli to avoid closing down. KaloBios now has eight employees.