Desmairis had loaned the company $1.4M secured by the IP. He'd offered an additional half million for a liquidation and made a stalking horse bid to take the IP for the value of his loans. There was an opportunity for any biotech company that believed in the IP to step in and offer more than that stalking horse bid, but it didn't happen. What Desmairis would have done had he acquired the IP is unknown, but he probably expected to recover some of his loans, maybe even profit, from selling the IP unencumbered by all the debt the company had.
That liquidation would have wiped out the toxic lenders who'd loaned the company money through the years, $14-15M IIRC. Auctus was in for $3.3M. Those same toxic lenders started converting loans like mad prior to the bankruptcy filing, adding 1.6B shares to the O/S. Some of that stock likely wasn't sold yet. Those lenders don't like getting wiped out, so a new plan was put forward, one with the headline "save the common stock!!!"
So they did. They gave the unsecured lenders stock for their loans at a penny a share when it had been pumped up higher than that, and those lenders were quite happy to sell. Loans that should have been largely devalued in a bankruptcy became profitable. O/S surges up to 2.7B, toss on 15B shares in warrants, debt that was about 1/2 of what they entered bankruptcy with. Now the debt is higher, the O/S is above 3B, stock really isn't moving well.
Pay attention to the S-1/A.
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