Prison healthcare provider YesCare and its backers reached a $37 million settlement of legal and financial liability it moved into bankruptcy court through an emerging corporate restructuring tactic, WSJ Pro Bankruptcy reported. YesCare, among the nation’s largest providers of healthcare in prisons and jails, agreed to the proposed deal with a committee of creditors whose claims it shifted to chapter 11 through a legal tactic known as the Texas Two-Step. The settlement payment from YesCare and its investors would cover only a fraction of the claims asserted by inmates who filed malpractice lawsuits against the business or vendors it failed to pay. If approved in bankruptcy court, the proposed deal would also resolve the bankruptcy case filed earlier this year by Tehum Care Services, the shell entity used to ferry the company’s debts and liabilities to chapter 11. YesCare put a new spin on the Texas Two-Step by using it earlier this year to address not just tort lawsuits, but ordinary commercial debts to hospitals, physicians and other vendors. YesCare began the chapter 11 process by separating assets from liabilities last year through a corporate reorganization in Texas. The Tehum affiliate was made responsible for the company’s liabilities before it filed for protection in February in the U.S. Bankruptcy Court in Houston.
