Cetero Research‘s bankruptcy reorganization is under way, but a sale of the beleaguered clinical research organization had actually been in the works for months. As the CRO worked with the U.S. Food and Drug Administration to address concerns about clinical trial data that was allegedly falsified, the company simultaneously shopped itself to potential buyers.

A bidding process that started last fall with 36 potential buyers was narrowed to three bids — two for the entire company and one for just one Cetero facility, according to the Cetero bankruptcy filing. The one party that was granted exclusivity to come up with a final, binding proposal ultimately decided not to submit a final bid.

Cary-based Cetero still plans a sale of the company. But under the chapter 11 bankruptcy plan, the sale will be an auction to the highest bidder. The company’s lenders will be the “stalking horse” bidder that sets the floor price for other bids to top. In the meantime, those lenders have agreed to provide Cetero $15 million in debtor-in-possession financing to keep the company operating during the restructuring.

The CRO now known as Cetero is the product of mergers and acquisitions of several contract research firms. In 2006, North Dakota-based PRACS Institute was acquired by Contract Research Solutions, a CRO formed by Denver, Colorado private equity firm KRG Capital Partners to build a presence in early stage clinical research. The company then acquired Gateway Medical research and later BA Research. As Cetero, the CRO expanded its reach in Texas with the 2008 acquisition of DGD Research. DGD’s Houston site is the facility that would later become the focus of the FDA’s data integrity concerns.

Cetero traces its current financial position to a July, 2011 FDA letter that publicly disclosed the agency’s concern that up to five years of Cetero clinical trial data had been compromised. Cetero attributed the problem to six research chemists who recorded inaccurate date and time information in order to claim overtime pay. But the FDA said that the discrepancies were more widespread.

Cetero said it proactively reported its finding to the FDA in 2009. The agency’s view was that inquiries from both Cetero and a contracted third party were inadequate. Still, regulatory concerns did not become public until last July, and only then because the FDA took the step of notifying pharmaceutical and biotechnology companies by letter that any clinical research done at Cetero’s Houston site may need to be repeated or reconfirmed. As a consequence, Cetero said its lenders “declared an event of default due to the apparent violation of applicable health laws and regulations.”

Cetero anticipated financial problems even before the FDA’s concerns became public. Cetero said in the filing it developed a restructuring plan in 2010 to align costs with revenue projections. Early that year, Cetero vacated one leased facility and laid off workers at the site. The CRO also implemented broader layoffs to cut costs.

Some time later — Cetero’s filings do not state exactly when — the company hired restructuring specialists Carl Marks Advisory Group. Cetero also retained Jefferies & Company to coordinate a potential sale of the company. Last October, Jefferies began seeking buyers for Cetero and identified both pharmaceutical industry parties as well as financial entities. Meanwhile, Cetero continued to work with the FDA to verify clinical trial data. By November, Cetero reported that the FDA’s original five-year time line that required retesting or reconfirmation of data had been shaved by more than two years.

Cetero’s bankruptcy filing reports assets with a book value totaling approximately $205 million and liabilities of approximately $248 million. It’s unclear what price the CRO will fetch in the stalking horse process. Cetero said that its first lien lenders agreed to an asset purchase agreement that set a stalking horse bid higher than that indicated by the party who decided not to submit a final offer for the company. Cetero said it expects to maximize recovery for all creditors through the stalking horse sale. But the CRO, which built its niche in early stage research by acquiring different pieces of the early phase clinical research puzzle, may find greater value and bidder interest in those pieces rather than the whole.