23andMe Files for Bankruptcy, DNA Data of 15 Million Users at Risk

23andMe Holding Co. has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Missouri, aiming to facilitate a sale and maximize business value. The California-based genetic testing company, known for its at-home ancestry kits, has faced financial struggles, including weak demand and a 2023 data breach. CEO and co-founder Anne Wojcicki has stepped down, with Chief Financial Officer Joe Selsavage appointed as interim CEO. The company assures customers that operations, including data storage and security practices, will continue as usual during this process.

Genetic Testing Firm Seeks Court Approval to Begin Asset Sale Process Under Chapter 11 Bankruptcy

Founded in 2006, 23andMe gained popularity among millions of Americans who submitted saliva samples to explore their ancestry and genetic health risks. However, recent challenges, including a class-action settlement related to a data breach, the resignation of all independent board directors, layoffs, and the closure of its drug development division, have led the company to consider potential buyers.

23andMe has requested court approval to begin a sale process for its assets under a Chapter 11 plan or Section 363 of the U.S. Bankruptcy Code. If approved, the company will work with an independent investment banker to solicit bids over a 45-day period. If the company receives multiple bids, it will hold an auction to maximize asset value. Any potential buyer will be required to comply with legal obligations regarding the handling of customer data. 

“After a thorough evaluation of strategic alternatives, we have determined that a court-supervised sale process is the best path forward to maximize the value of the business,” said Mark Jensen, Chair and member of the Special Committee of the Board of Directors. “We expect the court-supervised process will advance our efforts to address the operational and financial challenges we face, including further cost reductions and the resolution of legal and leasehold liabilities.” Jensen believes in 23andMe’s team and assets, hoping this process helps their mission of making the human genome accessible and beneficial for customers and patients.

Company to Address Legal Liabilities from October 2023 Cyber Incident in Bankruptcy Proceedings 

The company has filed customary motions requesting court approval for various “first-day” relief measures. These include permission to pay employee wages and benefits and continue compensating certain vendors and suppliers. The company has also sought approval to reject multiple contracts, including real estate leases in Sunnyvale and San Francisco, to lower operating expenses. The company expects the court to approve these requests.

Additionally, 23andMe plans to address legal liabilities from the October 2023 cyber incident through its bankruptcy proceedings. Hackers accessed customer data, compromising personal and genetic information. The breach led to multiple class-action lawsuits and regulatory scrutiny. Through Chapter 11, the company may negotiate settlements or restructure financial obligations related to these claims. Bankruptcy protection could help manage legal costs and potential financial penalties while allowing operations to continue. Any resolution will require court approval and compliance with data privacy regulations.

Jensen also stated, “We want to thank our employees for their dedication to 23andMe’s mission. We are committed to supporting them as we move through the process. In addition, we are committed to continuing to safeguard customer data and being transparent about the management of user data going forward, and data privacy will be an important consideration in any potential transaction.”

Anne Wojcicki Resigns as CEO of 23andMe After Rejection of Bid to Take Company Private

In the same press release, 23andMe announced that Anne Wojcicki has resigned from her position as Chief Executive Officer, effective immediately. Wojcicki and the Special Committee of the Board of Directors mutually agreed on her resignation. Wojcicki will remain a member of the company’s Board. The decision follows the rejection of her bid to take 23andMe private in early March 2025. Wojcicki expressed disappointment over the outcome in a post on X, highlighting her dissatisfaction with the decision.

“While I am disappointed that we have come to this conclusion and my bid was rejected, I am supportive of the company and I intend to be a bidder.” she wrote. “I have resigned as CEO of the company so I can be in the best position to pursue the company as an independent bidder. We have had many successes but I equally take accountability for the challenges we have today. There is no doubt that the challenges faced by 23andMe through an evolving business model have been real, but my belief in the company and its future is unwavering.”

The company has secured a commitment for debtor-in-possession (DIP) financing of up to $35 million from JMB Capital Partners. Pending court approval, 23andMe expects the DIP financing, along with cash from ongoing operations, to provide financial support during the bankruptcy proceedings.

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Denisse Sandoval