Bankruptcy Judge Frank Kurtz ruled yesterday that Astria Health could obtain an additional $8 million in debtor-in-possession financing, the Yakima (Wash.) Herald reported. When Sunnyside, Wash.-based Astria Health filed for bankruptcy in early May, it revealed plans to secure $36 million from JMB Capital Partners to stabilize its finances while it went through bankruptcy. Judge Kurtz approved $28 million of that amount just days after the bankruptcy filing. Astria used the funds to help cover payroll as well as pay off more than $21 million it owed to two secured lenders, Banner Bank, and MidCap Lenders. Yesterday’s ruling hinged on whether Lapis Advisers, Astria Health’s largest creditor, would have adequate protection with the new debt Astria Health was accumulating through the debtor-in-possession financing. Lapis Advisers, which loaned Astria $44.5 million, was concerned its financial interests wouldn’t be protected if something went wrong with Astria Health’s plan to emerge from bankruptcy. To that end, Lapis Advisers requested additional provisions to ensure adequate protection, such as monthly payments. Astria Health has maintained that issues collecting revenue caused cash flow issues that led it to file for bankruptcy. They believe with a new vendor, they will be able to resolve that issue and emerge from bankruptcy by year’s end.
