(Bloomberg) -- A unit of UpHealth Inc. 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.
UpHealth Holdings Inc. filed for Chapter 11 on Tuesday, listing assets and liabilities each of between $100 million and $500 million, according to a Delaware bankruptcy petition.
The company completed a combination with GigCapital2 Inc. and Cloudbreak Health LLC in June 2021 and began trading on the New York Stock Exchange. The deal is the latest involving a former special purpose acquisition company, or SPAC, transaction to collapse into a bankruptcy.
Its shares have lost 84% of their value in the last year and closed Monday at 98 cents.
Chief Executive Officer Sam Meckey said in a statement Uphealth turned to bankruptcy to protect its stakeholders “and achieve a fair resolution of this matter through an appeals process of the Needham judgment.” The Chapter 11 filing is not expected to have an impact on UpHealth’s operations, Meckey said.
The bankruptcy comes little more than a week after New York Supreme Court Justice Margaret A. Chan ruled against UpHealth in a contract dispute with Needham, which was retained to raise capital for the telehealth startup. Filing bankruptcy immediately pauses the litigation.
Justice Chan ruled UpHealth owes Needham $31.3 million plus interest and other costs. UpHealth said at the time that Justice Chan’s ruling redefined the terms of its contract with Needham and that it would explore options for settling the dispute and appealing the decision.
UpHealth said in its petition that it owes Needham $40 million, and is disputing that amount.
The case is UpHealth Holdings Inc., case number 23-11476, US Bankruptcy Court District of Delaware (Wilmington).
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