KaloBios Pharmaceutical files for bankruptcy

The company, based in San Francisco, is planning to use its bankruptcy to buy time to implement a restructuring plan, said court papers.

KaloBios, a small biotech company taken over recently by Mr. Shkreli, last week said it received a delisting letter from the Nasdaq Stock Market, days after Mr. Shkreli wascharged with securities fraud.

Shkreli is charged with misappropriating more than $11 million in assets from publicly traded Retrophin (RTRX) to pay back investors he had defrauded over a five-year period between September 2009 and September 2014. KaloBios’s largest unsecured creditors include the University of Miami and Ernst and Young. With the appointment, KaloBios announced that Shkreli and other investors would provide an investment of at least $3 million. Retrophin said Shkreli used company funds for personal use, enriched himself through false consulting contracts and referred to Shkreli as “the paradigm faithless servant” who “is not entitled to compensation or post-separation benefits”.

Shkreli was arrested on Dec 17 for engaging in what USA prosecutors said was a Ponzi-like scheme at his former hedge fund and a pharmaceutical company he previously headed.

The move comes shortly after the company appealed a decision by the Nasdaq stock market to delist its shares, Bloomberg Business reported.

Then on November 18, 2015 Martin Shkreli, the chief executive of privately held biopharmaceutical company Turing Pharmaceuticals AG, had been acquiring KaloBios shares on Nov. 16 and 17, according to filings with the Securities and Exchange Commission. After the announcement that he had taken a controlling stake and named himself chief executive officer, they surged to a closing high of $39.50 on Nov 23.

KaloBios could not immediately be reached for comment. Shkreli was also elected chairman of the board, and David Moradi, Tony Chase and Marek Biestek were elected to the board, as well.