Finch Therapeutics Group - Chapter 11 Plan Terms

Plan / RSA Terms

Overview

• The Bankruptcy Court on Sept. 3, 2026 confirmed the first amended combined disclosure statement and joint Chapter 11 plan of Finch Therapeutics Group, Inc. and three debtor affiliates, approving the disclosures on a final basis and authorizing the centerpiece transaction: an all-cash sale of substantially all remaining assets to Ferring Asset Holding LLC for $30 million.
• The debtors are a microbiome-therapeutics developer that ceased drug development in January 2023, when funding constraints, slow Phase III enrollment for its recurrent-CDI candidate CP101, and unauthorized use of its intellectual property forced discontinuation of that trial; headcount fell from more than 150 full-time employees to one, and the company thereafter pursued value through licensing and patent enforcement rather than commercial sales.
• The remaining asset base consists of an intellectual property portfolio of over 160 issued U.S. and foreign patents and pending applications, nearly 100 of them directly owned and the balance exclusively licensed from partners including the Regents of the University of Minnesota, together with a proprietary microbial strain library and associated research data.
• The buyer shares the Ferring name with the defendants in the debtors' patent case, and the judgment against them is part of what it is buying. Ferring Pharmaceuticals Inc. and Rebiotix Inc. sued the debtors in the U.S. District Court for the District of Delaware in December 2021 seeking a declaration of non-infringement and invalidity; an August 2024 jury instead found willful infringement of all three asserted patents and awarded a $25 million upfront payment plus $815,061 in running royalties through trial, entered as a $25,815,061 judgment. On June 10, 2026 the District Court denied Ferring's motion for judgment as a matter of law, denied the debtors' request for enhanced damages, upheld the trial-date damages, and granted supplemental damages, ongoing royalties and pre- and post-judgment interest; on July 2, 2026 it entered final judgment in favor of the debtors and the University of Minnesota, which exclusively licenses one of the three patents to Finch Therapeutics Holdings, for $29,505,816.72 plus ongoing royalties and post-judgment interest. The debtors' rights in that judgment and in the litigation are among the assets Ferring is buying.
• The plan is a joint plan for administrative purposes only, constitutes a separate plan for each debtor, and is not premised on substantive consolidation.

Auction Outcome

• Ferring Asset Holding LLC was designated the successful bidder on its $30 million cash bid; Crestovo Investor, LLC, whose competing proposal was a fully backstopped rights offering under a Chapter 11 plan, was designated the back-up bidder.
• Rock Creek Advisors, LLC, the debtors' sales agent, contacted approximately 146 strategic and financial counterparties, 20 of which signed non-disclosure agreements and accessed the data room. No viable stalking horse proposal arrived before the deadline, which the debtors had extended from May 7 to May 28, 2026, so no stalking horse was designated.
• The debtors pushed the bid deadline and auction from May 28 and June 2 to June 12 and June 15, 2026. Multiple qualified bids arrived, and with Ferring and Crestovo still bidding at the close of the first session the debtors continued the auction to June 18 and again on June 22, June 23 and June 24, 2026.
• Before the auction concluded on June 24, 2026, the debtors reached agreement in principle with Ferring on the material terms of a sale to be consummated through a Chapter 11 plan, reflecting Ferring's $30 million cash bid. Crestovo did not bid again after that figure was placed, and the debtors determined the Ferring transaction was the highest or otherwise best offer.
• The court found the auction and bidding procedures were duly noticed, non-collusive, and fair, and that the Ferring APA constitutes the best or otherwise highest offer for the purchased assets.

Sale Transaction

• Consideration is $30 million in cash, plus Ferring's payment of all cure claims and its assumption of certain liabilities identified in the asset purchase agreement.
• Ferring acquires substantial assets of the debtors, including patents and other intellectual property owned by or licensed to them and their rights in the District Court judgment and the patent litigation, but excluding certain assets identified in the APA.
• The debtors assume and assign to Ferring the executory contracts and unexpired leases identified in the APA and related sale documents; Ferring pays cure claims at closing or as soon as reasonably practicable thereafter, or on such other terms as it agrees with each counterparty. The cure amounts set forth in the cure notice are deemed the sole amounts necessary to cure defaults under the assigned contracts.
• Assets transfer free and clear of all claims and encumbrances, liens, interests and charges to the fullest extent permitted under the Bankruptcy Code, other than assumed liabilities and permitted liens, with any claims and encumbrances attaching to the portion of the purchase price attributable to the assets against which they are asserted, in the same priority and with the same validity they had against the assets.
• The confirmation order carries the standard buyer protections: Ferring is a good faith purchaser, so reversal or modification of the sale authorization on appeal will not affect the validity of the transaction absent a stay; neither Ferring nor its affiliates is a successor to, continuation of, or successor employer of any debtor; and no governmental unit may revoke or suspend a permit or license relating to the purchased assets on account of the Chapter 11 filing, consummation of the sale, or the debtors' failure to pay prepetition claims.
• The APA and related instruments may be modified, amended, supplemented or restated in a signed writing without further court order, provided the change does not have a material adverse effect on the estates or third parties.
• The APA may be terminated on the events set forth in its Article 8, which would cause a condition to plan effectiveness to fail; it also lets Ferring elect to seek a section 363 sale order and consummate outside the plan if the plan is not confirmed by Sept. 1, 2026. The court heard confirmation on Sept. 1 and entered the confirmation order on Sept. 3, 2026, and the plan defines confirmation as entry of that order, so confirmation came two days after the date the APA sets.

Financing

• The debtors funded these cases entirely from approximately $3.5 million of cash on hand as of the March 22, 2026 petition date, with no debtor-in-possession facility and no funded or secured indebtedness under any loan instrument as of that date, the Hercules Capital, Inc. loan and security agreement having been repaid in full in January 2023 for $16.2 million in aggregate principal, interest, fees, costs and expenses.

Classification and Treatment

• Classes 1 through 4 are unimpaired, deemed to accept, and estimated to recover 100%:
  • Class 1 (other secured claims) receives, at the debtors' or plan administrator's option, payment in full in cash plus postpetition interest from the petition date at the non-default contract rate or the federal judgment rate, the collateral securing the claim, reinstatement, or other treatment rendering the claim unimpaired.
  • Class 2 (other priority claims) receives payment in full in cash plus postpetition interest at the non-default contract rate or the federal judgment rate, reinstatement, or other unimpairing treatment.
  • Class 3 (general unsecured claims) receives payment in full in cash, reinstatement, or other unimpairing treatment, with the allowed amount including interest from the petition date through the effective date at the federal judgment rate.
  • Class 4 (intercompany claims) receives payment in full in cash or reinstatement.
• Class 5 (FTG equity interests) is impaired and the only voting class; it voted to accept. All FTG equity interests are cancelled on the effective date, and each holder of an allowed interest receives its pro rata share of available cash consistent with its interest in FTG as of the distribution record date, distributed through the transfer agent for registered holders and through DTC for street-name holders. Approximately 1,605,763 shares of FTG common stock are outstanding, approximately 1,146,492 of them held through DTC, and the liquidation analysis estimates approximately $19 million, or approximately $11.83 per share, may be available for distribution to equity, subject to the amount of allowed claims, unanticipated claims or litigation against the estates, and unexpected administration costs. The debtors also expect the sale to generate taxable income and state they cannot guarantee sufficient net operating losses to avoid a material cash federal income tax liability, which turns in part on whether any debtor has undergone an ownership change under section 382; any such liability would reduce the equity recovery. The debtors obtained interim and final orders establishing notice and objection procedures for transfers of FTG equity to preserve those attributes.
• Class 6 (intercompany interests) is impaired and deemed to reject, with a 0% recovery; each interest is cancelled, released, reinstated, transferred, set off, settled or otherwise addressed in a tax-efficient manner, and holders receive nothing.
• Because no class of claims is impaired, the debtors sought and obtained confirmation over Class 6 under section 1129(b), the court finding the plan does not discriminate unfairly and is fair and equitable as to that class.
• Unclassified claims (administrative, professional, restructuring expenses, priority tax, and U.S. Trustee quarterly fees) are unimpaired and not entitled to vote. No distribution is made on any allowed claim or interest the plan administrator reasonably values at less than $50.
• Priority tax claims are paid in full, at the debtors', liquidating debtors' or plan administrator's option either in cash on the later of the effective date, 30 days after allowance and the ordinary-course due date, or in equal annual cash installments over a period not exceeding five years from the petition date with interest at the section 511 rate; holders retain any tax liens at the validity, extent and priority they had on the petition date until paid in full.

Restructuring Expenses

• Crestovo is reimbursed for its reasonable and documented professional fees, expenses and disbursements from the petition date through the effective date, capped at $400,000 in the aggregate.
• These expenses constitute allowed administrative claims payable in full in cash on the effective date or as soon as practicable thereafter, to the extent not already paid during the cases, without any application to the court or further order, under sections 503(b)(1), 1123(b)(6) and 1129(a)(4). Invoices may include a good faith estimate of fees through the effective date and must be delivered at least 10 business days before the anticipated effective date.
• The back-up bid conditioned reimbursement on the debtors' selection of an alternative bid as the highest or otherwise best offer, and the court found the payment a reasonable exercise of business judgment necessary to Crestovo's continued participation in the bidding and auction.

OpenBiome Claim Reserve

• Following the effective date the debtors will set aside $1.35 million from net sale proceeds in the disputed claims reserve pending entry of a final order allowing, disallowing or otherwise resolving the disputed proof of claim filed by OpenBiome Foundation, or that claim's settlement or withdrawal.
• The set-aside is not an admission as to the claim's validity, priority or amount; the debtors, liquidating debtors and plan administrator reserve all rights, claims, defenses and objections, including the right to object to or otherwise challenge the claim in all respects.

Wind-Down and Plan Administrator

• Distributions, payments, reserves and escrows are funded from cash on hand as of the effective date and the cash proceeds of the sale.
• Available cash to equity is the net sale proceeds plus remaining cash, less amounts needed to pay allowed administrative, professional, priority tax, restructuring expense, quarterly fee, other secured, other priority and general unsecured claims; amounts reserved to fund the projected costs of carrying out the plan and winding down the estates; section 1930 fees; and any reserve or escrow amounts, including the professional claims escrow account and any disputed claims reserve.
• On the effective date all estate assets other than the purchased assets and the professional claims escrow account vest in the liquidating debtors free and clear of liens, claims, charges and other encumbrances, to be administered by the plan administrator, whose appointment and governing agreement the court approved in all respects.
• Also on the effective date the existing boards are dissolved and remaining officers, managers and managing members dismissed; the directors and officers are deemed to have resigned and their authority terminated; the plan administrator assumes the powers of officer, director and manager of each debtor; and the debtors assign and transfer all remaining assets to the plan administrator after accounting for plan distributions.
• As soon as practicable after the effective date and after all distributions are made, the plan administrator will file certificates of dissolution or cancellation for each liquidating debtor without stockholder, board or member approval, together with all other documents needed to terminate their corporate existence under applicable state law.
• The plan administrator's authority runs to claims reconciliation and objections, distributions, marketing or abandonment of remaining assets, prosecution or settlement of retained causes of action, retention and payment of professionals, establishment of reserves and escrows, tax administration and returns, and payment of statutory fees, in each case without further court approval unless otherwise indicated. Retained causes of action exclude any causes of action sold to Ferring as purchased assets, and all avoidance actions not sold under the APA are retained.
• The plan is deemed substantially consummated on the effective date under sections 1101 and 1127(b).

Executory Contracts

• All executory contracts and unexpired leases are deemed rejected on the effective date other than those assigned to Ferring under the APA and those that: were previously assumed, assumed and assigned, or rejected by final order; are subject to an assumption motion pending on the effective date; the debtors have authority to assume with a later effective date; appear on the schedule of assumed and retained contracts and leases and are not removed before the effective date; or provide for severance or other benefits to former employees, whether by plan or individual agreement. Listing an agreement is not an admission that it is executory.
• Rejection damages claims must be filed within 25 days of the later of the order approving rejection or the rejection effective date, are classified as general unsecured claims, and are barred if untimely.
• Indemnification obligations for directors, managers, officers and employees are assumed effective as of the effective date, survive confirmation, and are unmodified, and D&O coverage in effect on the petition date may not be terminated or reduced by or on behalf of the debtors, with all directors, managers, officers and employees entitled to the full benefit of the policies for their full terms whether or not they remain in office. D&O policies and all other insurance policies are assumed under sections 105 and 365, with the liquidating debtors remaining liable in full for the debtors' obligations under them and insurers retaining all rights and defenses.
• The debtors' lease with Hood Park, LLC for approximately 61,139 square feet in the Charlestown neighborhood of Boston, never used for operations and carrying roughly $51.6 million of fixed rent over its 10-year term with initial annual base rent of approximately $4.5 million, was rejected by final order effective March 31, 2026 over the landlord's objection. Hood Park did not appeal.

Releases, Exculpation and Injunction

• Released parties are each debtor and liquidating debtor, each holder of an FTG equity interest that affirmatively opts in, and the related parties of the debtors and liquidating debtors, a defined term reaching their current and former directors, managers, officers, employees, affiliated funds and vehicles, partners, members, management companies, fund advisors, financial advisors, attorneys, accountants, investment bankers, consultants and other agents and professionals, together with those parties' own past and present directors, officers, shareholders, partners, members, employees and agents, in each case solely in that capacity.
• Releasing parties are each debtor and liquidating debtor; Class 5 holders who check the opt-in box on their ballot; Class 1, 2 and 3 holders who timely return an opt-in election form; and the related parties of each of the foregoing, to the extent legally bound. The releases are opt-in only, and the court found them consensual under applicable law.
• Neither the debtor releases nor the third-party releases reach claims arising from an act or omission judicially determined by final order to constitute fraud, willful misconduct or gross negligence; post-effective-date obligations under the plan, the confirmation order, the sale and other restructuring transactions, the definitive documents or any implementing document; or obligations arising under the sale transaction documents. The third-party releases additionally carve out post-effective-date obligations under any contract or lease assumed by final order, rights to distributions required under the plan or confirmation order, and properly pled direct claims, other than claims against the debtors, held by a creditor that is not a releasing party; the debtor releases additionally preserve any right of objection, defense, mandatory counterclaim or setoff against a claim or interest.
• Exculpated parties are the debtors and their professionals and each debtor's officers, directors, limited liability company managers and members, in each case only to the extent they served between the petition date and the effective date; exculpation covers acts and omissions in that window and excludes fraud, willful misconduct and gross negligence.
• All claim and interest holders and other parties in interest, along with their present and former employees, members, managers, agents, officers, directors, principals and affiliates, are enjoined from interfering with implementation or consummation of the plan, with administration of the retained causes of action, and with the sale or any other restructuring transaction.
• A second injunction runs from the effective date until the remaining estate property vested in the liquidating debtors has been liquidated and distributed and the plan fully administered, subject to extension or reduction on motion, and bars those same parties, as to claims, interests and causes of action addressed by the plan, from:
  • commencing or continuing any suit, action or proceeding in any forum against or affecting the debtors, the liquidating debtors, the plan administrator or their property;
  • enforcing, levying, attaching or collecting on any judgment, award, decree or order against them or that property;
  • creating, perfecting or enforcing any encumbrance against them or that property;
  • asserting any right of setoff, except as the plan allows and except where the setoff is asserted in a filed proof of claim or by motion filed before confirmation; and
  • acting in any manner that does not conform to the plan.
• Except for liens securing reinstated allowed other secured claims or as otherwise provided in the plan or a definitive document, all mortgages, deeds of trust, liens, pledges and other security interests against estate property are fully released, settled and compromised.
• No provision of the plan or confirmation order grants a discharge under section 1141(d). Nothing precludes the SEC from enforcing its police or regulatory powers or from proceeding against non-debtors in any forum.

Conditions Precedent

• The effective date is the first business day after the confirmation date on which the sale has closed, all other conditions have been satisfied or waived, and the other restructuring transactions have been consummated. Effectiveness turns on:
  • entry of a confirmation order that is a final order, reasonably acceptable to the debtors, approving the disclosure statement on a final basis, authorizing the debtors to enter into and implement the transaction documents, decreeing that the plan and order are non-severable and mutually dependent, authorizing consummation of the sale and all distributions, and confirming the section 1146 transfer-tax exemption;
  • the Ferring APA remaining in full force and effect and never having been terminated;
  • receipt of all authorizations, consents, regulatory approvals, rulings and documents necessary to implement the plan;
  • execution or filing of final versions of the plan, definitive documents and plan supplement materials in form and substance consistent with the plan and unmodified without the debtors' consent;
  • payment in full of all professional claims then due and payable under a court order, other than those subject to later approval;
  • funding of the professional claims escrow account; and
  • tender for delivery and execution of all documents and agreements needed to implement the plan and the sale, with their own conditions satisfied or waived.
• The debtors may waive any condition at any time, without notice, court order, or any formal action.

Key Dates

• Petition date: March 22, 2026
• Bidding procedures order: April 22, 2026
• Bid deadline, as extended: June 12, 2026
• Auction commenced June 15, 2026 and concluded June 24, 2026 after continuations on June 18, June 22 and June 23
• Voting record date: July 15, 2026
• Voting deadline: Aug. 24, 2026 at 4:00 p.m. (prevailing Eastern Time)
• Confirmation hearing: Sept. 1, 2026 at 10:00 a.m. (prevailing Eastern Time)
• Confirmation order entered: Sept. 3, 2026
• Governmental bar date: Sept. 18, 2026 at 5:00 p.m. (prevailing Eastern Time)
• Administrative claims bar date: the first business day 30 days after the effective date, at 5:00 p.m. (prevailing Eastern Time)
• Professional claims bar date: 45 days after the effective date, with objections due 21 days after final fee applications are filed
• Claims and administrative claims objection deadline: 180 days after the effective date, subject to extension
• Notice of effective date to be filed and served within two business days after the effective date

Case Posture

• No official committee of unsecured creditors was appointed; the U.S. Trustee filed a statement to that effect on April 1, 2026.
• All objections to the combined disclosure statement and plan not withdrawn, waived or settled by the combined hearing were overruled in their entirety, and the confirmation order took effect on entry rather than after the usual 14-day stay.