SAN DIEGO, July 1, 2005 /PRNewswire via COMTEX/ -- Metabolife International Inc., http://www.metabolife.com, a San Diego based industry leader in the manufacture and sale of herbal-based dietary supplements used for weight control, today filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court, Southern District of California in San Diego. Metabolife offers METABOLIFE ULTRA, along with other weight management products in grocery, drug and mass retail locations nationwide. Along with the filing, Metabolife announced a potential sale of its assets for $23.5 million to IdeaSphere Inc, a health and wellness concern, subject to competitive bidding at an auction proposed for September 2005. Christopher R. Barclay of Mack | Barclay, an experienced insolvency and turnaround expert, has been retained to lead the company through the Chapter 11 process. David Osias and Deb Riley, of Allen Matkins, have been retained as bankruptcy counsel.
Metabolife's filing is for the purpose of maximizing the value of its assets through the bankruptcy sale process and to utilize bankruptcy procedures to determine the validity and amount of claims asserted by past users of weight-loss products containing ephedra. Ephedra was the primary ingredient in what once was Metabolife's flagship product, Metabolife 356. Metabolife successfully transitioned its business to ephedra-free products by December 2003, but has had to commit inordinately large resources and time to defending lawsuits filed by ephedra product users, which costs have been a substantial burden on the company's operations. Although Metabolife has been largely successful in avoiding significant adverse judgments, the costs of the litigation process and the uncertainty surrounding the large number of remaining lawsuits makes bankruptcy a suitable mechanism for obtaining a prompt, fair and cost effective resolution of these disputed claims.
Metabolife's assets will be sold under Section 363 of the Bankruptcy Code, which allows sales to be free and clear of liens, encumbrances and claims, including liabilities related to the pending litigation. A public auction will be held to determine if higher bids emerge, currently proposed for September 2005, with a sale closing shortly thereafter. New York based Carl Marks Advisory Group LLC has been retained as financial advisor to Metabolife, and to promote the auction opportunity and solicit overbidding. It is anticipated that all of the proceeds from the Section 363 sale will be utilized to satisfy creditor claims and to resolve the pending litigation.