Brisbane-based Microbio, the creator of a rapid sepsis blood test, entered voluntary administration in May after burning through its cash reserves and posting heavy operating losses during its research and development phase.

Despite successfully launching its flagship InfectID-BSI product in Europe and India, the company could not attract new investors because of a major roadblock – a share structure that legally entitled a specific group of “preference” shareholders to the first $24m of any returns.

With no other viable funding options and dwindling cash, the directors placed the company into administration to preserve its value and allow a restructuring proposal to be considered.

“The board determined that appointing WCT Advisory was the most appropriate course of action to preserve enterprise value, maintain operations, and provide a structured pathway to recapitalisation,” Microbio said in a statement to News Corp.

“Importantly, Microbio’s underlying business operations, commercial activities, and strategic opportunities continue to progress positively.”

At a meeting on Tuesday, stakeholders voted in favour of the rescue deal spearheaded by major secured creditor CJT Capital and Microbio Toowoomba, which the board said reflected “strong creditor support for the future of the business and its people”.

The proposal was accepted after a rival preference shareholder group failed to submit a competing rescue bid.

The group had recently dragged the company to the Federal Court to demand access to internal financial records.
This legal manoeuvre was designed to scrutinise emergency loans from CJT Capital and the board’s use of “safe harbour” in November last year – a legal shield that protects directors from being held personally liable for insolvent trading while they try to orchestrate a corporate rescue.

The rival group launched the legal action after successfully voting down the board’s initial rescue plan at an April 8 general meeting.

That initial proposal would have converted millions in company debt to equity and wiped out the group’s preference shares for nothing.

By blocking the deal, the shareholders left the company with no alternative funding, ultimately forcing the directors to place Microbio into administration.

Under the newly approved rescue deal, the syndicate will provide a $4.5m working capital facility, while CJT Capital will convert its $5.76m secured debt entirely into shares, wiping its hands of a cash return.

For the company’s 44 unsecured creditors owed $1.18m, the approved deal guarantees they will be repaid in full, while all employees will retain their jobs and have their entitlements totalling over $450,000 paid in the ordinary course of business.

In her statutory report to creditors issued earlier this month, administrator Tracy Lee Knight of WCT Advisory strongly urged stakeholders to accept the deal.

She warned that if the proposal was rejected and the company was instead forced into liquidation, staff would be sacked and unsecured creditors would receive zero cents in the dollar.

Ms Knight also cautioned that the value of Microbio’s flagship intellectual property, which would cost an estimated $13.28m to replicate, would plunge in a liquidation scenario if founder Dr Flavia Huygens and other key scientists walked out the door.

To ensure Dr Huygens – who is a director of the company alongside Matthew McNamara and James MacPherson – stays with the business, the deal will boost her ownership stake to 10 per cent of the company.

The administrator’s report lodged with ASIC laid bare the scale of the financial hole that led to the company’s near-collapse.

Incorporated in 2017, the biotechnology firm relied on equity raises, government grants, and loans to fund its pre-commercialisation phase.

It suffered net operating losses of $4.2m in FY23, $5m in FY24, $7.7m in FY25, and $6.5m in the 2026 year-to-date.