Timber Pharmaceuticals files for Chapter 11 in wake of failed merger (NYSE:TMBR)

Timber Pharmaceuticals (NYSE:TMBR) reportedly filed for Chapter 11 bankruptcy protection Friday afternoon after shareholders again refused to approve a planned merger with LEO Pharma.

The dermatology drug developer filed for Chapter 11 protection in a Delaware court, listing its assets as no more than $10M and its liabilities of at least that amount, Bloomberg reported after market close.

Timber disclosed in an SEC filing made early Friday afternoon that the deal failed to win a majority of shareholder votes during a special shareholders meeting. Shares of Timber were trading 17% higher when they were halted for pending news at around 12:40 p.m. ET.

Analysts speculated earlier this week that Timber might be forced to declare bankruptcy if shareholders didn’t approve the deal as it didn’t have the cash to pay back the bridge loan LEO had provided ahead of the merger.

LEO had offered $14M for Timber, plus a contingency value right worth up to $22M. Payment of the CVR was subject to certain deductions related to 50% repayment of a $3M bridge loan to be provided by LEO.

The deal was announced in August but failed to get enough shareholder support at a special meeting held in October.