Diabetes device maker files pre-negotiated bankruptcy plan with support from 97% of secured creditors
LifeScan Global Corporation, the diabetes monitoring device company spun off from Johnson & Johnson in 2018, filed for Chapter 11 bankruptcy protection on July 15, 2025, proposing to eliminate approximately $1.4 billion in liabilities through a pre-negotiated restructuring plan backed by nearly all of its secured lenders.
The Malvern, Pennsylvania-based company, which serves roughly 20 million users worldwide with its OneTouch blood glucose monitoring products, filed the bankruptcy petition in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, under case number 25-90259 (ARP). The filing comes as LifeScan faces mounting financial pressure from the rapid adoption of continuous glucose monitoring technology and unsustainable rebate obligations to pharmacy benefit managers.
LifeScan entered bankruptcy with approximately $667 million in funded debt across three tranches, including $364.7 million in first lien term loans, $275 million in second lien term loans, and $27.4 million in third lien term loans. The company also faces roughly $1.03 billion in outstanding rebate claims, bringing total liabilities to nearly $1.7 billion.
Market Disruption and Financial Decline
The company's financial distress stems primarily from the diabetes care market's shift toward continuous glucose monitoring (CGM) devices, which provide real-time glucose readings without finger pricks, compared to traditional blood glucose meters that require manual testing. This technological shift has been accelerated by expanded Medicare coverage for CGM products in 2023 and growing reimbursement globally since 2019.
"The BGM market will continue to decline approximately 9% year-over-year through 2030 and beyond," according to market studies LifeScan conducted with FTI Consulting. The company's revenue dropped to approximately $750 million in 2023, marking a significant decline from previous years.
Adding to LifeScan's challenges are burdensome rebate agreements with pharmacy benefit managers (PBMs), under which the company retains less than 9% of its established wholesale acquisition cost on products sold through these arrangements. As of June 2025, LifeScan owed approximately $1.03 billion to rebate counterparties.
Restructuring Plan Details
Under the proposed plan, various stakeholder classes would receive different treatment. First lien lenders would recover 97%-100% of their claims through a combination of cash and new debt instruments. Second lien secured claimholders would receive 37%-63% recovery through equity in the reorganized company. Third lien lenders would receive approximately 30% recovery, while general unsecured creditors would see roughly 1% recovery.
The restructuring has garnered support from approximately 97% of the company's secured creditors, who are parties to a restructuring support agreement initially signed in February 2025. Platinum Equity, LifeScan's private equity sponsor since the 2018 acquisition, also supports the plan and will receive a 5% equity stake in exchange for providing advisory services to the reorganized company.
Committee Opposition
Despite the broad creditor support, the Official Committee of Unsecured Creditors has taken a contrary position, recommending that general unsecured claimholders vote to reject the plan and opt out of proposed releases. The committee believes "the Plan is not confirmable," according to a letter attached to the disclosure statement, though specific details of their objections were not elaborated in the filing.
The disagreement highlights tensions between secured and unsecured creditors over the proposed distribution scheme and legal releases that would protect various parties from future litigation.
Business Transformation Efforts
LifeScan has attempted to adapt to market changes through various cost-cutting initiatives that generated more than $400 million in savings between 2019 and 2024. The company has also pursued entry into the CGM market through a global partnership agreement signed in 2019, though regulatory delays have pushed the expected U.S. launch to potentially the first half of 2027.
The company operates manufacturing facilities in Inverness, Scotland, and maintains relationships with five major external manufacturers globally. It employs approximately 1,300 people across 50 countries, with significant operations in the United States, Canada, Mexico, the United Kingdom, Europe, and Asia.
Legal Representation and Timeline
Porter Hedges LLP and Milbank LLP are representing LifeScan as co-counsel in the bankruptcy proceedings. The disclosure statement was signed by President and Chief Executive Officer Valerie Asbury.
Key dates in the bankruptcy timeline include a voting deadline of October 6, 2025, at 5:00 p.m. Eastern Time, and a confirmation hearing scheduled for October 20, 2025, at 9:00 a.m. Central Time. The company must implement and consummate the restructuring by October 28, 2025, according to the restructuring support agreement, unless extended by requisite creditor majorities.
LifeScan has also initiated a dual-track process that includes a potential asset sale under Section 363 of the Bankruptcy Code to market-test the reorganization plan and determine if a superior transaction might be available. PJT Partners LP was retained as the company's investment banker on June 27, 2025, to assist with this process.
The case represents one of the larger healthcare industry bankruptcies in recent years, involving a company that was once a cornerstone of J&J's diabetes device business for more than 30 years before its $2.1 billion divestiture to Platinum Equity in 2018.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 119 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.