Zymergen: Ginkgo Sale and 56% Trust Recovery

Zymergen Inc., a synthetic biology company that raised roughly $530 million in its April 2021 IPO, filed chapter 11 petitions on October 3, 2023 in the U.S. Bankruptcy Court for the District of Delaware (Case No. 23-11661). The filing came after product commercialization failures, post-IPO securities litigation, and sustained operating losses that consumed the company's cash reserves. Zymergen entered bankruptcy with no funded debt and approximately $7.4 million in unpaid trade obligations.

The sale process produced two successful bidders, Ginkgo Bioworks and Pivot Bio, and a negotiated settlement that resolved disputes between the debtors, Ginkgo, and the official committee of unsecured creditors. A liquidation plan was confirmed on February 5, 2024, and the ZYM Liquidating Trust became effective on February 23, 2024. Through December 2025, the trust had paid roughly 56% of allowed general unsecured claims, with cumulative payments of $34.9 million against $62.0 million in allowed claims.

Debtor(s)	Zymergen Inc. (4 jointly administered entities)
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	23-11661
Petition Date	October 3, 2023
Judge	Hon. Karen B. Owens
Confirmation Date	February 5, 2024
Effective Date	February 23, 2024
Headquarters	Emeryville, California
Employees at Filing	101 full-time U.S. employees
Funded Debt	None
Trade Obligations	Approximately $7.4 million
Successful Bidders	Ginkgo Bioworks, Inc. and Pivot Bio, Inc.
Liquidation Trustee	Neal P. Goldman, Development Specialists, Inc.

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Synthetic Biology Platform and April 2021 IPO

Zymergen was founded in April 2013 as a science and materials innovation company focused on designing, developing, and commercializing bio-based products. The company built a platform around metagenomic libraries, data science, and software tools, and shifted from an R&D-services model toward commercializing its own products starting in 2019-2020. The First Day Declaration of Claire Smith traces that buildout, describing how Zymergen moved from performing contract research for industrial partners to developing proprietary product candidates, including an electronics-grade film called Hyaline and a pipeline of additional bio-based materials.

Zymergen expanded through acquisitions, purchasing Radiant Genomics in December 2017, enEvolv in March 2020, and Lodo Therapeutics in May 2021. The Lodo acquisition, completed for stock consideration, later gave rise to a lawsuit by Fortis Advisors that became part of the litigation portfolio the debtors carried into chapter 11. The debtor group at filing included Zymergen Inc., Lodo Therapeutics Corporation, enEvolv, Inc., and Genesis Acquisition Sub, LLC.

Zymergen completed its IPO on April 22, 2021, raising approximately $530 million. Venture capital firms including SoftBank Group Corp. units, DCVC, and True Ventures held controlling positions in the company before the offering. The company had not yet commercialized its lead products at the time of the offering. The First Day Declaration states that Zymergen's pre-IPO revenue came primarily from R&D service agreements and collaborations rather than product sales.

Hyaline Failure, Securities Litigation, and Cash Burn

Claire Smith stated in the First Day Declaration that Zymergen had not commercialized products as of early 2021, later concluded the Hyaline opportunity was weaker than expected, and disclosed those issues in August 2021. The IPO registration statement had estimated a "trillion-dollar opportunity" across 20 industries for Zymergen's platform. By November 2021, the company discontinued Hyaline and other pipeline products and cut approximately 220 positions. Over the 14 months before filing, the debtors terminated 323 positions as they sought to reduce cash burn.

Securities litigation. The post-IPO disclosures triggered a securities class action, a derivative action, and a separate lawsuit by Fortis Advisors tied to stock consideration in the Lodo Therapeutics acquisition. In August 2024, Judge P. Casey Pitts of the U.S. District Court for the Northern District of California allowed fraud claims to advance against SoftBank Group Corp. units (SB Investment Advisers (US) Inc.), DCVC Management Co., True Venture Management LLC, and their associated funds, ruling that investors adequately alleged those venture capital firms controlled Zymergen in the lead-up to the IPO. The First Day Declaration states that the company also continued to defend SEC-related matters through the petition date, and those proceedings remained live through post-confirmation administration. In March 2026, Goldman Sachs, JPMorgan, and Bank of America agreed to pay $125 million to settle the IPO investor class action, pending court approval.

SEC enforcement. In September 2024, the SEC announced a $30 million civil penalty against Zymergen for misleading IPO investors about the company's market potential and sales prospects. The SEC's administrative order found that Zymergen had claimed a $1 billion electronics display market opportunity for Hyaline, but the estimate was based on pricing assumptions 3-5x higher than comparable products and included markets the sales team was not targeting. The sales team's internal analyses showed the actual display market opportunity at $42 million to $100 million -- roughly 5-10% of the figure presented in the IPO prospectus. The SEC also found that Zymergen provided misleading revenue forecasts to research analysts that exceeded internal estimates and misrepresented the status of its customer pipeline during its first public earnings call. The SEC charged that the company's IPO registration materials included forward-looking statements with no reasonable basis, placing Zymergen alongside enforcement targets such as Theranos and Skael. Monique C. Winkler, director of the SEC's San Francisco Regional Office, stated that "pre-revenue and early-stage companies that seek to tap the capital markets must do so with reasonable estimates of their market potential."

Strategic alternatives. The First Day Declaration states that management and the board evaluated three alternatives in late 2021 and early 2022: a sale of Zymergen, a carve-out or financing and separation of the automation business, and continuing as a standalone company with a financing raise. The board chose a sale as the primary path while exploring all three in parallel. The declaration describes an extended marketing process that ultimately did not yield a going-concern transaction at acceptable terms before the company's cash position forced the chapter 11 filing.

Zero Funded Debt and Workforce at Filing

Zymergen entered chapter 11 with no funded debt. The First Day Declaration states that none of the debtors were borrowers or obligors on any funded debt as of the petition date, with approximately $7.4 million of unpaid trade and ordinary-course obligations.

The Wages Motion describes 101 full-time U.S. employees and approximately 90 employees who performed work for Ginkgo under an employee leasing arrangement. Outstanding prepetition wages, independent-contractor payments, and leasing-agreement invoices totaled roughly $200,000, with about $5,000 in accrued PTO obligations. The leasing arrangement with Ginkgo predated the bankruptcy and later became part of the sale transaction.

The debtors did not seek DIP financing or cash collateral. The first-day package instead centered on operational continuity motions: the Wages Motion for employee obligations, a Utilities Motion for continued service, a Cash Management Motion to maintain existing bank accounts and intercompany transfers, and an Administrative Claims Bar Date Motion to set deadlines for post-petition claims. The Sale Motion was also filed on the first day, reflecting the debtors' intent to move directly into a court-supervised sale process.

Sale Process and Two-Buyer Outcome

A restructuring committee had been formed on August 31, 2023, with sole authority over restructuring and sale decisions. The Bidding Procedures Declaration filed by Ivona Smith states that the committee was established specifically to oversee a fair process free from parent-company influence, given Ginkgo's existing relationship with the debtors.

Stalking-horse economics. The Bidding Procedures Declaration describes an initial stalking-horse agreement carrying a $5 million cash purchase price plus assumption or elimination of significant liabilities, including about $5 million of employee severance liability. Post-filing negotiations revised the stalking-horse terms to add $2.5 million of cash consideration, require assumption of the 1440 Stanford Avenue lease with an approximately $5 million estate benefit through return of letter-of-credit cash collateral and elimination of rejection-damages exposure, and restructure the transaction so the stalking horse would acquire estate claims against itself. The court entered the Bidding Procedures Order on November 20, 2023, setting the framework for the competitive process.

Ginkgo settlement. The Rule 9019 Settlement Motion with Ginkgo provided the most concrete economics. The settlement required prompt payment of $2,117,254 in outstanding invoices, payment of additional invoices billed at least five business days before closing, a condition that not-yet-due payables could not exceed $2 million, subordination of Ginkgo claims behind Class 3 general unsecured claims, and releases by Ginkgo of claims against former directors and officers. The settlement also assigned certain causes of action to the liquidation trust and required committee support for confirmation subject to agreed plan amendments. The parties agreed to work in good faith to close the sale by January 1, 2024. The settlement was approved on December 8, 2023.

Two successful bidders. By December 14, 2023, the debtors filed a Notice of Successful Bidders naming Ginkgo Bioworks, Inc. and Pivot Bio, Inc. Sale orders were entered on December 21, 2023. The Pivot Bio Sale Order found that the APA represented the highest and best offer for its covered assets and that consummating the transaction quickly was necessary because the assets risked deterioration in value. A broader Sale Order governed the Ginkgo transaction and the remaining asset dispositions. Ginkgo subsequently completed its acquisition of the Zymergen assets, reporting the transaction in its SEC filings as part of its 2024 acquisitions and divestitures activity.

Auction results and consideration. The two winning bids split the assets and the consideration. Ivona Smith's sale-support declaration valued the Ginkgo bid at at least $6.3 million of cash, plus elimination of approximately $5 million of employee severance liability and an approximately $5 million estate benefit from assuming the non-residential real property lease through return of the cash-collateralized letter of credit and elimination of rejection claims. Pivot Bio paid $2.3 million of cash plus assumption of certain liabilities for a distinct subset of the assets. The debtors' confirmation memorandum reports the aggregate result: the closed sales to Ginkgo and Pivot Bio brought $8.6 million of cash into the estates and relieved the estates of more than $10 million of liabilities through a two-day auction, a result the debtors characterized as higher than the stalking-horse bid.

Liquidating Plan and ZYM Trust Formation

The Disclosure Statement describes a liquidation plan rather than a going-concern reorganization. Estate property vested in a liquidation trust on the effective date rather than revesting in the debtors. The plan funding structure depended on sale proceeds, wind-down activity, and remaining cash held by the estates at the time of the effective date.

Class treatment. The Disclosure Statement provides that Class 1 priority claims and Class 2 secured claims were unimpaired. Class 3 general unsecured claims were impaired and entitled to vote. Class 4 subordinated claims, Class 5 equity interests, and intercompany classes received no distribution. At the confirmation hearing, Class 3 creditors voted 100% to accept the plan. Debtors' counsel projected recoveries above 90% for that class, and UCC counsel Simpson Thacher estimated up to 95% recoveries on unsecured claims.

Liquidation trustee. The Revised Plan Supplement identifies Neal Goldman of Development Specialists, Inc. as the initial liquidating trustee. The supplement also sets removal and succession mechanics, including committee-counsel involvement in appointing a successor before Class 3 claims are paid in full. The Confirmation Order authorized the trustee to settle disputed claims without court approval in many instances, subject to notice if a settlement would allow a disputed claim above $1 million. On the effective date, all liquidation-trust assets vested in the trust and the trustee became the sole representative of the debtors and their estates.

Contested-matter reservations. The Confirmation Order preserved specific treatment for the SEC, Lighthouse, and securities-litigation constituencies. For the SEC, the order required consultation over reserves before distributions if the SEC had not yet filed a claim, preserved SEC police-and-regulatory powers, and left subordination issues for later proceedings under applicable law. For Lighthouse, the order fixed a prepetition cure component of $136,167, required the trust to reserve cash for that amount, and scheduled any remaining dispute for a March 4, 2024 omnibus hearing. A later stipulation set the total Lighthouse cure amount at $272,060, resolving the dispute after insurance issues were sorted out.

SEC Penalty and the Class 3 Distribution Waterfall

The SEC's claim was the largest single contested claim against the estate and shaped the distribution mechanics for general unsecured creditors. To make a meaningful initial distribution to Class 3 while the trust and SEC staff were still negotiating, the ZYM Liquidating Trust filed a stipulation motion authorizing an SEC claim of up to $30 million as an allowed Class 3 general unsecured claim.

The stipulation structured an initial distribution of up to $33 million, of which $5 million was paid or reserved solely on account of the SEC claim and up to $28 million went to other Class 3 third-party claim holders. Subsequent distributions run 50/50 between third-party claims and the SEC until third-party claims are paid in full, then 100% to the SEC until its claim is satisfied, and finally 100% to Ginkgo's subordinated general unsecured claim. The stipulation also extended the SEC governmental bar date from April 1, 2024 to September 30, 2024 and preserved the estate parties' right to seek subordination of the SEC claim in a separate proceeding rather than making subordination automatic. The court approved the stipulation on June 10, 2024.

The SEC's underlying enforcement order, dated September 13, 2024, imposed the $30 million civil penalty and ordered Zymergen to cease and desist from violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act. The full $30 million was fixed as an allowed Class 3 claim, with $5 million payable promptly on court approval and the remainder paid through plan distributions; the Commission agreed to forgo further distributions on any unpaid penalty balance upon termination of the liquidating trust.

By an August 2024 claims-objection extension motion, the trust reported that the initial distribution to allowed Class 3 general unsecured claim holders reached 78.7%. The trustee has extended the claims-objection deadline repeatedly since; the most recent extension motion, filed March 30, 2026, requests a further extension to September 30, 2026 and states that Class 3 reconciliation is nearly complete with a few remaining disputed claims being resolved consensually.

Post-Confirmation Distributions and Trust Administration

The plan became effective on February 23, 2024. The Notice of Effective Date set March 25, 2024 at 5:00 p.m. Eastern as the deadline for administrative expense claims and rejection claims, and April 8, 2024 for final fee applications.

As of the quarter ended December 31, 2025, the ZYM Liquidating Trust remained active with no final decree entered. The Post-Confirmation Report shows cumulative payments of $34,947,082 on general unsecured claims against total allowed claims of $61,972,293, a 56% recovery rate. Administrative claims were 99% paid and priority claims were 94% paid. Total cumulative approved professional fees and expenses reached $7,578,685, with $6,786,997 paid. The trust remained in active administration as of December 2025, with disputed claims resolution and post-confirmation litigation continuing.

Recovery measurement. The 56% cumulative figure reflects payments against a $62.0 million allowed Class 3 pool that includes the SEC's $30 million claim, a larger denominator than the third-party claims underlying the 78.7% initial distribution the trust reported in August 2024.

Key professionals and approved fees. The Post-Confirmation Report identifies cumulative approved fees for the principal estate professionals, including Morris Nichols Arsht & Tunnell ($1,944,829 as co-counsel), Intrepid Investment Bankers ($1,549,403 as investment banker), and Chilmark Partners ($1,168,259 as financial advisor). Simpson Thacher & Bartlett represented the official committee of unsecured creditors ($1,445,677 in approved fees), with Berkeley Research Group serving as UCC financial advisor ($411,462).

Professional	Role	Cumulative Approved Fees
Morris Nichols Arsht & Tunnell	Co-counsel (debtors)	$1,944,829
Intrepid Investment Bankers	Investment banker	$1,549,403
Simpson Thacher & Bartlett	Counsel (UCC)	$1,445,677
Chilmark Partners	Financial advisor	$1,168,259
Berkeley Research Group	Financial advisor (UCC)	$411,462

Equipment disposition. Following the sale of intellectual property and operating assets to Ginkgo and Pivot Bio, Zymergen's remaining laboratory and office equipment was auctioned in January 2025.

Key Timeline

Date	Event
October 3, 2023	chapter 11 petitions filed; Sale Motion, Wages Motion, and first-day papers filed
October 4, 2023	Initial plan and disclosure statement filed
November 14, 2023	Bidding Procedures Declaration filed with revised stalking-horse economics
November 20, 2023	Bidding Procedures Order entered
November 27, 2023	Rule 9019 settlement motion filed (debtors, Ginkgo, and UCC)
December 8, 2023	Ginkgo settlement approved
December 14, 2023	Notice of Successful Bidders filed (Ginkgo and Pivot Bio)
December 21, 2023	Sale orders entered
February 2, 2024	Revised Plan Supplement filed; Neal Goldman named liquidating trustee
February 5, 2024	Confirmation Order entered
February 23, 2024	Plan effective date; ZYM Liquidating Trust activated
September 2024	SEC announces $30 million civil penalty
January 2025	Remaining equipment auctioned
February 5, 2026	Post-Confirmation Report filed (quarter ending December 31, 2025)
March 2026	Goldman Sachs, JPMorgan, and Bank of America agree to $125 million settlement of IPO investor class action, pending court approval

Frequently Asked Questions

What happened to Zymergen?

Zymergen filed chapter 11 on October 3, 2023 in Delaware after product commercialization failures, post-IPO securities litigation, and sustained cash burn consumed the roughly $530 million raised in its April 2021 IPO. The company sold its assets to Ginkgo Bioworks and Pivot Bio through a court-supervised process, and a liquidation plan was confirmed on February 5, 2024.

When did Ginkgo Bioworks acquire Zymergen's assets?

Ginkgo Bioworks, Inc. and Pivot Bio, Inc. were named as the two successful bidders on December 14, 2023. The court entered sale orders on December 21, 2023, with separate orders governing the Pivot Bio and Ginkgo transactions; Ginkgo later reported the acquisition in its SEC filings as part of its 2024 acquisition and divestiture activity.

What are creditors recovering in the Zymergen bankruptcy?

Through December 2025, the Post-Confirmation Report shows the ZYM Liquidating Trust had paid 56% of allowed general unsecured claims, with cumulative payments of $34.9 million against $62.0 million in allowed claims. At the confirmation hearing, debtors' counsel had projected recoveries above 90% for general unsecured creditors.

Who is the claims agent for Zymergen?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent under a retention order entered October 4, 2023. The liquidating trustee's Class 3 reconciliation against the official claims register remained open into 2026 under repeated objection-deadline extensions.

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