SmileDirectClub Inc., a dental aligner company, has filed for bankruptcy four years after its successful initial public offering (IPO) that raised $1.35 billion. The Chapter 11 filing, made in Texas, will allow the company to continue operating while it develops a plan to repay its creditors. As part of its reorganization, the company’s founders will invest a minimum of $20 million into the business. This bankruptcy filing marks a significant setback for SmileDirectClub, which had previously emerged as a disruptive force in the dental industry with its direct-to-consumer approach.
Despite raising a considerable amount of capital through its IPO, SmileDirectClub has faced numerous challenges in recent years. The company’s business model, which enabled customers to obtain clear aligners without visiting a dentist, sparked controversy within the dental industry. Several state dental boards and associations pushed back against SmileDirectClub, arguing that its services should fall under the jurisdiction of traditional dental practices. Additionally, the company faced scrutiny from the Food and Drug Administration over safety and manufacturing concerns.
By filing for bankruptcy, SmileDirectClub aims to address its financial difficulties and develop a plan to settle its debts. While the company’s founders are committed to investing in its future, the bankruptcy filing highlights the challenges faced by disruptive startups in highly regulated industries. It remains to be seen how SmileDirectClub will navigate these obstacles and regain its footing in the dental market.