Under an agreement it is negotiating with Fortress, the creditor would be able to take control of a "special objective subsidiary" that holds Theranos' intellectual property, but relinquish rights to its remaining $5 million in cash, which Theranos would distribute to the unsecured creditors.
The turning point then came in October 2015, when investigative reporter John Carreyrou of The Wall Street Journal questioned the validity of Theranos' technology. Back in June, Elizabeth Holmes, Theranos founder and the company's former president, Ramesh "Sunny" Balwani, were indicted by a federal grand jury in California on charges of wire fraud.
Mr Taylor, who also serves as general counsel to the firm, said that Theranos had engaged the services of investment bank Jeffries to try to "maximise the value of the company" for shareholders.
Theranos and Ms Holmes, its founder, claimed that Edison, their invention, a portable blood analyser, could conduct comprehensive tests using tiny amounts of blood taken from a pinprick on the finger, rather than vials filled with blood taken from veins.
Theranos was founded in 2003 by Holmes when she was only 19.
Under founder and now-former CEO Elizabeth Holmes, Theranos raised more than $700 million from investors and was valued at $9 billion at its peak.
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). Inc Magazine described Holmes "as the world's youngest female self-made billionaire, she's stumbled into this rarefied position and is beginning to own it". Most of Theranos's two-dozen remaining employees worked their last day on Friday, Aug. 31. Walgreens ended its relationship with Theranos in 2016.
In March, US securities regulators accused the youthful entrepreneur of an "elaborate, years-long fraud".
As part of the settlement, Ms Holmes had to return millions of shares to the privately held company and pay a $500,000 fine.
Balwani continues to fight the SEC's charges against him.
Theranos laid off most of its staff earlier this year. Theranos didn't respond for a request to comment outside regular business hours.
Balwani issued a statement through a representative: "As an investor who put millions of dollars of his own money and almost seven years of his life into Theranos, Mr. Balwani was saddened to see the letter from Theranos to investors [Tuesday]".