Electronic cigarette company Juul Labs Inc. has found a way to avoid bankruptcy through a cash infusion from its early investors, with the new plan involving a round of layoffs.
“Today, Juul Labs has identified a path forward, enabled by an investment of capital from some of our earliest investors. This investment will allow Juul Labs to maintain business operations, continue advancing its administrative appeal of the FDA’s marketing denial order and support product innovation and science generation,” a Juul spokesperson said in a statement provided to The Hill.
As the company’s spokesperson noted in their statement, the Food and Drug Administration (FDA) briefly banned the sale and marketing of Juul’s e-cigarettes over the summer as part of the agency’s efforts to tamp down on youth vaping.
The FDA’s ban on Juul’s products was lifted shortly after it was issued due to “scientific issues” that warranted “additional review.”
“To further secure the company’s ability to continue moving forward, we are also undertaking a reorganization, including the difficult but necessary step of separating from many valued colleagues,” added the Juul spokesperson.
The Wall Street Journal was first to report on Juul’s plan to avoid bankruptcy.
A company official who spoke with the Journal said roughly 400 people are expected to be laid off, and the company’s operating budget will also reportedly be cut down by 30 to 40 percent.
This is the latest development in what has been a fiscally and legally tumultuous year for Juul. It was reported last month that the company had canceled plans to expand outside the United States.
Shortly after the FDA’s ban was lifted, Juul disclosed in July that it was exploring multiple financing alternatives as it faces a potential ban by the federal government as well as thousands of lawsuits at the state level alleging that it marketed its products to children and young people with its fruit- and candy-flavored vape pods.