Biolase: MegaGen Sale and Liquidation Plan

Biolase entered chapter 11 as a sale case, not an operating reorganization. The company filed in Delaware on October 1, 2024 with SWK as its dominant secured lender, a signed stalking-horse agreement with Sonendo, and a short runway to run a section 363 auction while funding operations through a lender-backed DIP facility described in the First Day Declaration and DIP Motion. The court directed joint administration of Biolase, Inc., BL Acquisition II, Inc., BL Acquisition Corp., and Model Dental Office, LLC under the Order Directing Joint Administration, and later filings reflect the renamed lead debtor as November 26, Inc.

The auction produced a higher result, a sale closing that moved the operating business to MegaGen, and a second phase in which the remaining estates shifted into a liquidation-trust wind-down. The Confirmation Order confirmed that structure in February 2025, but later claims-objection filings said the plan still had not gone effective by February 18, 2026 because the foreign-subsidiary wind-down was not complete.

Debtor	November 26, Inc. (f/k/a Biolase, Inc.) and three affiliates
Court	U.S. Bankruptcy Court for the District of Delaware
Case Number	24-12245
Petition Date	October 1, 2024
Confirmation Date	February 25, 2025
Judge	Hon. Karen B. Owens
DIP Facility	SWK-backed delayed draw facility of not less than $5 million, including a proposed roll-up of about $2.5 million of post-September 3 advances

Laser Market Decline and SWK Default

Biolase told the court in the First Day Declaration that years of weak adoption for dental laser technology, long sales cycles, liquidity pressure, sanctions-related limits on Russian business, ongoing patent litigation with PIPStek, and repeated Nasdaq compliance problems narrowed its options before the filing. The compliance failures culminated in delisting from Nasdaq on June 20, 2024. The first-day record also tied the immediate default to the SWK term loan after missed required payments around August 15, 2024 and a forbearance agreement signed on August 31, 2024 that contemplated bridge financing and a postpetition DIP facility.

The debtors said they had about $16.345 million of funded debt at filing, consisting primarily of roughly $16.195 million outstanding under the SWK term loan with a stated maturity of May 31, 2025, plus a $150,000 SBA loan maturing May 22, 2050. The debtors reported 121 full-time employees and a 26,000-square-foot manufacturing facility in Corona, California, but also sustained losses of about $20.6 million in 2023, $28.6 million in 2022, and $16.2 million in 2021, with an accumulated deficit of about $316.8 million as of December 31, 2023.

SWK DIP Facility and Sale Timeline

The Interim DIP Order approved a lender-controlled bridge to the auction on October 3, 2024. Biolase proposed a delayed multi-draw term loan of not less than $5 million from SWK, with the facility including consolidation of certain prepetition advances and a roll-up of about $2.5 million advanced after September 3, 2024. The requested maturity was 120 days after the petition date unless SWK consented to an extension. Milestone pressure was built directly into the facility: the proposed schedule required a sale-procedures motion within two days of the petition date, a bidding-procedures order within 21 days, an auction within 35 days, and closing within five days after entry of a sale order. The court entered a Second Interim DIP Order on October 28, 2024, continuing interim authorization on substantially the same terms.

The DIP package also set the normal chapter 11 leverage points. SWK received superpriority claims and replacement liens, subject to the DIP liens and carve-out. The carve-out covered statutory fees, up to $10,000 for a chapter 7 trustee, and capped post-termination professional amounts at $100,000 for debtor professionals and $15,000 for committee professionals. The challenge period structure reserved a $25,000 investigation budget for the unsecured creditors' committee, constraining any lien challenge while also limiting the committee's review resources.

Stalking Horse, Auction, and MegaGen Acquisition

Biolase told the court it had pursued strategic alternatives for years before filing, contacting 45 private-equity firms beginning in 2018, later engaging multiple investment bankers, contacting more than 30 potential investors, and obtaining confidentiality agreements from more than 100 parties. By the petition date, the debtors had signed a stalking-horse APA with Sonendo. The First Day Declaration described that opening bid as $14 million in cash plus assumed liabilities and litigation-related settlement components. The Bidding Procedures Order formally designated Sonendo as stalking horse on October 17, 2024, approved a 3% break-up fee and up to $420,000 of expense reimbursement, and set a November 12, 2024 sale hearing.

The auction took place on November 4, 2024. The Notice of Auction Results shows that the sale ultimately cleared well above the opening stalking-horse level. MegaGen Implant Co., LTD submitted the winning bid at $20.05 million in cash, while Sonendo was designated as the backup bidder at $19.95 million. The Sale Order entered on November 15, 2024 approved the sale free and clear, found MegaGen to be a good-faith buyer, held that the consideration represented the highest or otherwise best offer, and determined that the transaction did not constitute a sub rosa plan.

External reporting later described MegaGen as the company that officially acquired Biolase after the court-supervised process, and separate trade coverage likewise reported that Biolase was acquired by MegaGen Implant.

November 26 Liquidating Trust and Plan Confirmation

After the operating-asset sale, the case moved into a wind-down phase. The debtors filed a Combined Plan and Disclosure Statement on December 23, 2024, later amended as the Amended Combined Plan and Disclosure Statement, aimed at liquidating remaining assets and claims through a creditors' liquidation trust.

The confirmation package was supplemented by the Plan Supplement, filed on January 24, 2025, which identified the November 26 Creditors Liquidation Trust and named Robert Michaelson as liquidation trustee and disbursing agent. Under the liquidation trust agreement, the debtors were to transfer on the effective date their remaining cash other than the professional-fee escrow, retained causes of action not sold to MegaGen, other unsold estate claims and assets, and interests in non-debtor affiliates. The agreement also called for a $300,000 administrative reserve and a disputed-claims reserve.

The Confirmation Order entered on February 25, 2025 approved substantive consolidation under the plan, dissolved the unsecured creditors' committee on the effective date subject to limited retained rights, and required final professional-fee requests to be filed no later than 45 days after the effective date. Voting results summarized in the order showed Class 1 accepting 100% in amount and number, Class 2 unimpaired and deemed to accept, Class 3 accepting with 90.81% in amount and 68.42% in number, and Class 4 deemed to reject with no distribution expected.

Professional Retentions and Remaining Estate Assets

The court approved the main professional retentions on October 25, 2024. The SSG retention order authorized SSG Advisors as investment banker for the sale process. Separate orders authorized B. Riley Advisory Services as financial advisor, Potter Anderson & Corroon LLP as local debtor counsel, and Pillsbury Winthrop Shaw Pittman LLP as lead debtor counsel. For the unsecured creditors' committee, the court later approved the Dundon Advisers retention as financial advisor. By the January 31, 2026 monthly operating report, filed as the January 2026 MOR, the lead debtor reported cumulative bankruptcy professional fees and expenses of about $5.362 million, with no current-month bankruptcy professional fees shown on the report pages reviewed.

That same monthly operating report showed the estate still open administratively, with about $594,281 of ending cash, total liabilities of about $11.613 million, and zero current employees. The report noted that cash balances may differ from bank balances because of temporary storage of Biolase MG revenue.

Delayed Effective Date and Claims Objections

The post-confirmation docket shows that Biolase's chapter 11 did not end at confirmation. The foreign-subsidiary issue surfaced directly in December 2025, when the debtors filed a motion to abandon Biolase India equity interests, asserting that the interests had no realizable value, no ongoing business, and imposed needless administrative burden on the estates.

In the first omnibus claims objection, filed on February 18, 2026, the debtors said the confirmed plan had still not gone effective because the wind-down of foreign subsidiaries was incomplete. That objection targeted superseded claims and claims lacking sufficient documentation. A related scheduling certification set a March 27, 2026 hearing date for the first objection.

The debtors also used that February 2026 period to begin a larger claims cleanup. The second omnibus claims objection targeted asserted section 503(b)(9) claims, administrative claims, unvested equity-award claims, and assumed-contract claims, seeking either reclassification to general unsecured claims or outright disallowance and expungement depending on category.

Frequently Asked Questions

Did Biolase reorganize as an operating company in chapter 11? No. The case used chapter 11 first to run a sale process and then to confirm a liquidation plan for the remaining estates.

Who bought Biolase's operating business? MegaGen submitted the winning auction bid, and later trade reporting identified MegaGen as the buyer that completed the acquisition.

What happened to Sonendo's deal? Sonendo started the case as the stalking-horse bidder, but MegaGen outbid Sonendo at auction and Sonendo was designated as backup bidder.

Was the plan effective when the court confirmed it? No. The first omnibus claims objection said on February 18, 2026 that the confirmed plan had not yet gone effective because the foreign-subsidiary wind-down remained unfinished.

For more coverage of chapter 11 sale cases and liquidation plans, see the ElevenFlo bankruptcy blog.