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Blood-testing startup Theranos reportedly to dissolve

06 September 2018

In the email to shareholders, sent Tuesday, Theranos General Counsel and Chief Executive Officer David Taylor said the company is trying to negotiate a settlement with Fortress that would give the NY private-equity firm ownership of the company's patents but leave its remaining cash-estimated at about $5 million-for distribution to other unsecured creditors.

Theranos and Ms Holmes, its founder, claimed that Edison, their invention, a portable blood analyser, could conduct comprehensive tests using tiny amounts of blood taken from a pinprick on the finger, rather than vials filled with blood taken from veins.

Neither Taylor nor representatives for Palo Alto, California-based Theranos immediately responded to Reuters' requests for comment.

Theranos, the one-time Silicon Valley biotech star valued at more than $9 billion, has ultimately run out of money, employees and time.

Theranos is shutting down, The Wall Street Journal said on Tuesday night, citing a shareholder email. The company claimed it could perform a number of traditional lab tests with just a few drops of blood. But her net worth was later revised down to nothing.

Theranos founder Elizabeth Holmes and the company's former president Ramesh "Sunny" Balwani were indicted in June on charges that they engaged in schemes to defraud investors, doctors and patients.

Holmes, who was once considered a wunderkind of Silicon Valley, and Balwani were charged with conspiracy to commit wire fraud and nine counts of wire fraud each. Each invested $100 million or more in Theranos-investments that are now worthless.

The Securities and Exchange Commission brought civil fraud charges against Holmes and Balwani in March.

He said the startup hopes to reach a settlement with Fortress that would allow it to distribute an estimated $5 million it has left in cash to other creditors.

Taylor's email to shareholders was also reported by the Financial Times.

Under a liquidation process known as "an assignment for the benefit of creditors", getting that remaining cash to the unsecured creditors could take six to 12 months, Mr. Taylor said in the email.