Theranos, which owes at least $60 million to unsecured creditors, will turn over its assets and intellectual property to credit and investment firm Fortress, says the e-mailed letter, first reported by The Wall Street Journal.
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Elizabeth Holmes at Theranos headquarters in Palo Alto, Calif. on June 30, 2014. By brokering of a deal with the investment firm, Theranos gets to consolidate its leftover money in a trust for creditors that might take between six to 12 months to process.More news: British prosecutors to charge two Russians in United Kingdom nerve agent attack
The turning point then came in October 2015, when investigative reporter John Carreyrou of The Wall Street Journal questioned the validity of Theranos' technology.
The scandal-plagued blood-testing firm Theranos Inc. - once worth almost $9 billion - is headed for a shutdown. Instead of the familiar needles, tourniquets, vials, and bandages of the past, Theranos offered a comprehensive blood test that required just a finger stick and a single drop of blood.
Soon after she devoted herself full time to her company, Holmes attracted a number of key investors (including Larry Ellison and Draper Fisher Jurvetson) and high-profile board members (including former U.S. Secretaries of State Henry Kissinger and George Schultz, and former U.S. Senators William Frist and Sam Nunn).
She carefully crafted her image as well, wearing nearly entirely black turtleneck sweaters that earned her the moniker in Silicon Valley as 'the next Steve Jobs'.
Holmes and Balwani are also accused of lying to investors about the company's technological abilities.More news: Melania Trump says op-ed author 'sabotaging' country
Ms Holmes raised over $700m in funding for Theranos, but when she tried to pitch the technology to the US Department of Defense in 2012, her pitch was rejected due to the devices' unpredictable results.
The Journal's investigation marked the beginning of the end of Theranos. Holmes settled with the SEC, agreeing to pay $500,000 in fines and penalties.
Balwani continues to fight the SEC's charges against him.
Theranos laid off most of its staff earlier this year.
The gizmo that the company invented to collect the blood samples, the "nanotainer", would be sent to Theranos's own laboratories.More news: Democrat releases 'confidential' emails as Kavanaugh hearing heats up
FOX Business' Brittany De Lea contributed to this article.