%1

Trinity Regional Hospital Sachse borrowed $68 million just three years ago to build a new, state-of-the-art facility in a fast-growing area northeast of Dallas, Bloomberg News reported. Since opening its doors in November 2021, the hospital has encountered a litany of problems. On Tuesday, it filed for bankruptcy and is searching for a buyer. Trinity Regional’s plight, exacerbated by its own missteps, follows similar trouble for health-care facilities across the U.S., including a chapter 9 petition for a hospital district in California and the announced closure of a hospital in Eugene, Oregon, home of the state’s flagship research university. The health-care sector is still struggling with the effects of staff shortages and higher costs for wages and supplies that came after the COVID-19 pandemic prompted lockdowns and health crises in early 2020. But Trinity Regional’s own mishaps compounded its troubles from the start. Trinity Regional’s owners laid out the case for a new hospital in the bond offering: a fast-growing population, a site near a new highway, a fractured market with two recent hospital closures, a plan to expand into a 20-acre medical campus including doctors’ offices and an outpatient surgery center. The hospital would differentiate itself with a “lean” structure and a “culture of speed and quality in patient care,” with 30-minute limits for tasks such as reading radiology films. It would make “minimal” use of managed care and discounted services, the prospectus said, noting that 80% of the population in the area had commercial insurance.
Read more.

The financially troubled healthcare sector will be the focus of the ABI Healthcare Program, September 18-19, 2023, in Nashville, Tenn. For more information and to register, click here.

A federal bankruptcy trustee has objected to plans by the University of Iowa to fast-track its planned $20 million purchase of Mercy Hospital-Iowa City, the Iowa Capital Dispatch reported. Faced with the possibility of involuntary receivership, Mercy filed for bankruptcy earlier this month and, at the same time, announced plans for its acquisition by the University of Iowa. The Iowa Board of Regents approved the plan, which stipulates that the university will submit an initial bid of no less than $20 million to acquire Mercy — although the final purchase price could be higher if there are competing bids. Now, however, the federal bankruptcy trustee is objecting to the speed and manner in which the proposed sale is being handled. U.S. Trustee Mary R. Jensen has formally objected to proposed orders approving the bidding procedures and authorizing the hospital to provide certain financial protections to the university as the stalking-horse bidder. In a filing with the court, Mercy’s bankruptcy trustee argues that adequate time has not been allotted for other prospective buyers to submit a bid by the Sept. 19 deadline, undermining efforts to obtain the highest purchase offer for the hospital. “That deadline does not appear to provide sufficient time for other interested bidders to conduct their due diligence and submit a competitive bid,” the trustee has told the court. The trustee also cites the current lack of any evidence of the hospital being marketed to potential buyers, which is a necessary step to justify a shortened timeframe for a sale. The trustee also argues the various protections given to the university as part of the deal could discourage competing bids. Plans for the proposed sale state that to be deemed “qualified,” a bid must be for no less than $21.3 million — an amount that’s equal to the university’s original $20 million bid amount, plus $100,000, plus a 4% breakup fee, plus $400,000 for the university’s expenses. Read more.

The financially troubled healthcare sector will be the focus of the ABI Healthcare Program, September 18-19, 2023, in Nashville, Tenn. For more information and to register, click here.

Louisville-based Green District Salads has filed for chapter 11 bankruptcy protection, according to court documents, the Louisville Courier-Journal reported. Green District, led by Green District Franchisee Parent Inc., filed for chapter 11 protection with the U.S. Bankruptcy Court for the Western District of Kentucky Aug. 18, court records show. The fast-casual salad and sandwich-style restaurant operates at least eight locations in Louisville and the surrounding area, according to the restaurant's website. The company, represented by DelCotto Law Group PLLC., would be able to "restructure its creditor obligations to keep the business alive and pay back its debts over time" under chapter 11, according to the report. Opened by Jordan Doepke, Chris Furlow and Matt Petty, Green District's first store was opened in 2017 in St. Matthews. They have since added franchises in other states such as Indiana and Ohio. Lousiville-based investment company, The Castellan Group, was part of a private equity investment in the restaurant's expansion plans, according to previous Courier Journal reporting. The company planned a goal of $100 million in revenue from the restaurant by 2026.

Genesis Global and its parent company, Digital Currency Group (DCG), have reached an in-principle agreement with Genesis' creditors to resolve claims brought during the crypto lender's bankruptcy, a court filing showed on Tuesday, Reuters reported. The plan could lead to a recovery of about 70%-90% in U.S. dollar equivalent for unsecured creditors and about 65%-90% recovery on an in-kind basis depending on the denomination of the digital assets, according to the filing in the U.S. bankruptcy court in the Southern District Of New York. The deal includes a payment of about $630 million in unsecured loans due in May 2023 and a $1.1 billion unsecured promissory note due in 2032, along with some other potential claims. "DCG is pleased to reach an agreement in principle with Genesis and the unsecured creditors' committee, which will provide a framework for a comprehensive resolution of the claims in the Genesis chapter 11 cases and a pathway to significant recovery for creditors," DCG said in a statement to Reuters. Genesis filed for bankruptcy in January owing at least $3.4 billion to creditors and reached an agreement in principle on a restructuring plan, supported by Digital Currency Group, and its primary creditors, including Gemini, in February.

TV Azteca SAB agreed to negotiate with U.S. bondholders owed $400 million after a U.S. judge warned the second biggest broadcaster in Mexico that it could be forced to participate in a bankruptcy case in New York, Bloomberg News reported. U.S. Bankruptcy Judge Lisa G. Beckerman told the company that it was obvious to her that TV Azteca had to restructure its debt, despite strong resistance from the company. TV Azteca opposes a U.S. bankruptcy and has used court rulings in Mexico to try to block bondholders from collecting on the defaulted bonds. “Your position that there should be no restructuring is not going over very well with me,” Beckerman told TV Azteca. “It is one thing to say that a restructuring should not take place in the United States and it’s another thing to say ‘I’m ducking restructuring.’” Judge Beckerman said that she would delay ruling on whether she should force the producer of some of the most-watched Spanish-language shows to participate in a bankruptcy case in New York brought by US bondholders. Instead, the two sides will try to hire a former federal judge to act as mediator for about 60 days. “It just sounds like it has to have a restructuring,” Beckerman said of the company. That could happen in or out of court, but either way “it means parties will have to recognize that it’s restructuring time.” Lawyers for TV Azteca and the bondholders were in federal court in Manhattan Tuesday for the end of a two-day trial over the company’s request to dismiss the bondholder’s effort to put the broadcaster into chapter 11 bankruptcy. TV Azteca argues that disgruntled creditors can’t force it into bankruptcy because the company doesn’t own or operate anything of substance in the U.S. And even if Beckerman later rules that TV Azteca must participate in the proposed chapter 11, company managers, who are based in Mexico, may refuse to cooperate, TV Azteca lawyer William Clareman told the judge.

Grayscale Investments LLC won a key legal fight in its push to launch a Bitcoin exchange-traded fund, bringing the crypto industry to the precipice of tapping billions of dollars from everyday investors, Bloomberg News reported. The firm’s court victory over the U.S. Securities and Exchange Commission in a three-judge appeals panel in Washington represents a watershed moment for the largest cryptocurrency. Advocates say that an ETF based on spot Bitcoin prices would result in a gush of retail cash. The SEC, which has thus far only allowed crypto ETFs based on futures because it says they are safer, is reviewing the decision. The agency could still fight the ruling, either by asking a full slate of judges on the U.S. Court of Appeals for the D.C. Circuit, or the U.S. Supreme Court to review the decision. Meanwhile, the decision injects significant momentum into Grayscale’s yearslong push. It’s also a stinging rebuke of Chair Gary Gensler’s bid to clamp down on the industry. Investors welcomed the news. The Grayscale Bitcoin Trust rallied as much as 21% and Bitcoin surged by as much as 8.3%. Grayscale has said converting to an ETF would help it unlock billions of dollars in value for investors in its $16.2 billion trust by making it easier to create and redeem shares. The trust’s closed-end structure doesn’t allow for investors to redeem shares when prices fall, causing it to trade at steep discounts to its underlying Bitcoin. As an ETF, it could create and redeem shares to keep up with changing demand.

Foxconn Technology Group lost a bid to kick Lordstown Motors Corp. out of bankruptcy, a win for the troubled electric vehicle maker as it attempts to find a new owner for its business, Bloomberg News reported. Judge Mary Walrath yesterday refused to dismiss Lordstown’s bankruptcy case. She rejected Foxconn’s claim that the struggling EV startup improperly sought chapter 11 protection to gain an unfair edge in a legal dispute between the companies over a deal to make Lordstown’s flagship Endurance trucks. Lordstown said that it was running low on cash before it filed bankruptcy in June and facing an exodus of employees and customers after Foxconn said it was prepared to exit a production partnership. Under the circumstances, Judge Walrath said Lordstown had a valid reason for filing bankruptcy and is now pursuing a reasonable strategy for repaying its creditors by attempting to sell the business. Thomas Lauria, a lawyer representing Lordstown, said the Ohio-based manufacturer is formulating a debt repayment plan and is hopeful that it will find buyers in chapter 11 for all or parts of its business. Potential buyers have until Sept. 8 to submit bids for the company’s assets, according to court documents.

3M’s board approved a $6 billion settlement to resolve claims that its earplugs caused hearing loss among veterans, putting a long-awaited price tag on a large chunk of the company’s legal troubles, the Wall Street Journal reported. The settlement is substantially less than the $10 billion to $15 billion some analysts expected. 3M shares climbed on Monday after news of the initial settlement terms was reported over the weekend. 3M said that it would pay $5 billion in cash and $1 billion in stock between 2023 and 2029 to settle the allegations. The company will book a pretax charge of $4.2 billion in the third quarter. 3M said it is seeking insurance recovery to offset some of the settlement payments. Aearo, a company 3M bought in 2008, is suing its insurance carriers related to the litigation. Veterans allege that 3M and Aearo Technologies, a company 3M acquired in 2008, produced faulty earplugs that failed to protect their hearing from noise damage after they were issued by the U.S. military. 3M has said the earplugs work correctly when used with proper training. The earplug litigation has become the largest single mass tort in U.S. history, with more claims than any one company has faced for earlier mass litigation including asbestos exposure, opioid sales or wildfires. (Subscription required.)

After going public in 2021, Irving-based IT services company AgileThought Inc. announced a financial restructuring deal with Blue Torch Finance LLC that is set to take the company off the market, the Dallas Morning News reported. The company yesterday announced a go-private transaction, underpinned by an asset purchase agreement with an affiliate of Blue Torch Finance. In order to run this deal, AgileThought filed for bankruptcy under chapter 11, which allows companies to stay in business while restructuring their financial obligations. A Blue Torch affiliate has agreed to serve as the stalking-horse buyer of AgileThought’s assets. Blue Torch has agreed to provide approximately $22 million in new-money financing, according to a press statement. The restructuring alongside the capital funding aims to reduce AgileThought’s debt load and ground the firm’s financial foundation for the future. When the company went public in 2021, it had an initial market value of $491 million. AgileThought linked up with a special purpose acquisition company to go public. LIV Capital Acquisition Corp., headquartered in Mexico, backed the SPAC after it evaluated 80 companies before deciding on AgileThought. In its second-quarter financial report, the company reported $38.3 million in revenue, down 17.0% year over year from $46.2 million in Q2 2022.

Mallinckrodt on Monday disclosed that it faces a grand jury subpoena over sales of controlled substances as it filed for bankruptcy for the second time in three years to reduce by roughly $1 billion its prior pledge to pay compensation for its alleged role in the opioid crisis, the Wall Street Journal reported. Mallinckrodt said that it received the subpoena from the U.S. Attorney’s Office for the Western District of Virginia last week, seeking data and information dating back to 2017 about the company’s reporting of suspicious controlled substances orders, chargebacks and other transactions, as well as communications between the company and the Drug Enforcement Administration regarding those issues. The company said that it is in the process of responding to the subpoena and intends to cooperate in the investigation. It said it believes it is in compliance with its obligations through its compliance program for controlled substances. Mallinckrodt’s disclosure of the subpoena came at the same time that it announced it has initiated chapter 11 proceedings Monday in the U.S. Bankruptcy Court in Delaware, with a plan to hand control to its lenders and cut its outstanding payments to a compensation trust for opioid victims.