Zymergen: Ginkgo Sale and Liquidation Trust Recoveries

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.

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 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, making the post-IPO commercialization timeline the central business risk at the time of the public offering.

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; that opportunity fizzled within months of the offering. By November 2021, the company discontinued Hyaline and other pipeline products and cut approximately 220 positions.

Securities litigation and SEC matters. 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. Over the 14 months before filing, the debtors terminated 323 positions as they sought to reduce cash burn.

SEC enforcement. A post-confirmation SEC stipulation addressed the resolution of the SEC's claims against the estate. In September 2024, the SEC separately announced a $30 million civil penalty against Zymergen for misleading IPO investors about the company's market potential and sales prospects. The SEC charged that Zymergen had used unsupported hype about market size for Hyaline and provided unreasonable metrics estimates to investors. 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." The enforcement action placed Zymergen alongside cases such as Theranos and Skael as examples of startups that misrepresented their readiness to secure capital through public markets.

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 absence of secured debt simplified the case structure by eliminating the need for DIP financing, cash collateral negotiations, and adequate protection packages that dominate most chapter 11 first-day agendas.

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 reflected the operational relationship that predated the bankruptcy and later became part of the sale transaction structure.

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

The Sale Motion was the central first-day filing and the top hub document in the case by incoming docket references. 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.

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, and debtors' counsel projected recoveries above 90% for that class, a projection that subsequent trust reports have not yet borne out.

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.

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 gap between the 90% recovery projection at confirmation and the 56% cumulative payment rate as of December 2025 reflects the ongoing nature of trust administration, including disputed claims resolution and the tail of post-confirmation litigation.

SEC resolution. The post-confirmation SEC stipulation addressed the treatment of the SEC's claims within the bankruptcy estate. The Confirmation Order had specifically preserved the SEC's police-and-regulatory powers and required the trust to consult on reserve levels before making distributions if the SEC had not yet filed a formal claim. The $30 million civil penalty announced by the SEC in September 2024 resolved the enforcement action outside the bankruptcy proceeding, while the stipulation governed the in-estate treatment of related claims.

Key professionals and approved fees.

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

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.

Who acquired Zymergen's assets?

Ginkgo Bioworks, Inc. and Pivot Bio, Inc. were named as the two successful bidders in December 2023. The court entered sale orders on December 21, 2023, with separate orders governing the Pivot Bio and Ginkgo transactions.

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. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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