Bankrupt startup SiO2 Medical Products Inc. on Thursday received court approval for a $120 million loan, which includes $60 million of new capital, on its way to a planned handover of the business to Oaktree Capital Management LP, WSJ Pro Bankruptcy reported. The Auburn, Ala.-based medical device company filed for chapter 11 bankruptcy protection on Wednesday, facing a liquidity crisis after its unsuccessful capital raise efforts in the past few weeks, SiO2’s lawyer Brian Schartz said at a hearing in the U.S. Bankruptcy Court in Wilmington, Del. Bankruptcy Judge John Dorsey approved the $120 million bankruptcy loan sponsored by top lender Oaktree that will provide the business with $60 million of new capital, with the remaining $60 million to be used to pay back a portion of the debt held by Oaktree before the bankruptcy. Founded in 2012, SiO2 rapidly expanded in the medical device sector by manufacturing vials, syringes and tubes, using its patented materials. The company said it was running out of cash partly because of an ill-fated government contract signed during the pandemic to develop a vial for a COVID-19 vaccine. The 2020 contract granted SiO2 $143 million in funding to build necessary manufacturing facilities, while requiring as much as $128 million in expenditures under a cost-sharing agreement.
