SmileDirectClub has filed for Chapter 11 bankruptcy and is in the process of seeking a buyer to reorganize the company.

SmileDirectClub has voluntarily filed for protection under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the Southern District of Texas.

In bankruptcy court filings, the company detailed its difficulties resulting from the pandemic showing a string of large quarterly losses in 2021 and 2022. The company attempted to restructure itself from primarily brick and mortar SmileShops to a more consumer direct model which also negatively affected sales.

It also had legal troubles stemming from a lawsuit with Align Technology that SmileDirectClub lost, granting a $63 million judgment against the company. According to court documents, as of the bankruptcy filing SmileDirectClub had approximately $890.6 million in funded debt.

As of the filing, the company has 60 days to find a buyer. If a buyer is not found within the two month period, the company faces the possibility of liquidation under a Chapter 11 plan of reorganization.

The company announced a process to implement a comprehensive recapitalization transaction. The recapitalization is intended to bolster the company’s balance sheet and fuel growth initiatives.

SmileDirectClub will seek to recapitalize through a transaction where the company’s founders have committed to invest at least $20 million to bolster the company’s balance sheet and to protect its near- and long-term financial health.

Up to $60 million of additional capital is available upon satisfaction of certain conditions, including the favorable conclusion of a marketing process.

During this restructuring process, SmileDirectClub intends to continue to provide oral care to its customers without disruption. The additional liquidity the company received from its founders, coupled with its normal operating cash flows, is intended to ensure SmileDirectClub is able to continue meeting commitments to stakeholders without disruption throughout this process.

“We are taking this step today to help ensure we are well positioned to build upon the success of our SmileMaker Platform and CarePlus offering and to continue our mission of providing safe, convenient, and effective oral care to our customers,” said David Katzman, chief executive officer of SmileDirectClub. “This transaction is designed to ensure our future financial structure reflects the talent of our team members and the quality of our business, and I am excited about the future ahead. I look forward to continuing to work alongside leadership and our talented team to transform smiles with the reliability and quality our customers deserve.”