A judge ruled that a bankrupt hospital operator shouldn’t have to rely solely on financing from the federal government’s Covid-19 relief package because the timing of those funds could be uncertain, the Wall Street Journal reported. Hedge-fund manager Mudrick Capital Management LP, which holds a roughly 15 percent stake in bankrupt Quorum Health Corp., had objected to the company’s plan for $100 million in financing from current bondholders to help it get through chapter 11. Mudrick said Quorum could receive at least that much, maybe double that amount, from the government’s Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act. Mudrick lawyers said yesterday during a hearing in U.S. Bankruptcy Court in Wilmington, Del., that if Quorum’s own forecast of CARES Act aid — $45 million to $80 million — is accurate, then the company didn’t need a $100 million bankruptcy loan. Mudrick also had complained that lenders’ fees, interest payments and other charges in the bankruptcy financing were “exorbitant.” At the end of the six-hour hearing conducted by teleconference, which included live testimony from Quorum representatives, Bankruptcy Judge Karen Owens overruled Mudrick’s objection and gave final approval to Quorum to tap the loan. She said that Quorum appeared to have made an effort to shop for alternative financing to no avail, and that the terms are fair and reasonable in Delaware.
