The purchase of Mercy Iowa City by the University of Iowa has been approved by a bankruptcy court, KCRG reported. Mercy Iowa City initially announced its creditor, Preston Hollow Community Capital, had placed a winning bid at auction. However, after a dispute, it reopened bidding and selected the University of Iowa hospitals and clinics. Preston Hollow disputed that UIHC had that winning bid, but a bankruptcy judge approved the sale.
A senior-living company filed for bankruptcy this week after it exhausted an emergency loan, the latest to falter because of COVID-19, Bloomberg News reported. Nashville Senior Care LLC’s plight illustrates the pressures bearing down on the senior-living sector. Higher staff and supply costs on top of tepid demand for such facilities have caused defaults to outpace the rest of the municipal bond market this year. About 8% of the $43 billion in outstanding senior-living bonds is in default, compared with less than 1% of the total municipal bond market, according to data compiled by Bloomberg. At Nashville Senior Care, the pandemic shutdown lowered the number of residents “precipitously,” while expenses rose “dramatically,” leaving the facilities without the means to make needed investments, executive director Thomas Johnson said in a court filing. “This difficult combination of rising costs and a lower census, coupled with a high debt load from their financing, led to the Debtors’ default under their bond documents,” added Johnson, founder of the nonprofit Trousdale Foundation, which owns the facilities. The operator of five senior living facilities and one home health company in Tennessee, Florida and Ohio listed assets of $50 million to $100 million and liabilities of $100 million to $500 million, including about $213 million in municipal bond debt. Its bonds have been hit hard by the pandemic. A bond, issued by Highlands County Health Facilities Authority, due in 2038 with a 6% coupon traded at 12 cents in June.
Rite Aid appears to be pursuing a novel strategy to handle a huge number of opioid-related lawsuits by sidestepping plaintiffs until after filing for bankruptcy, WSJ Pro Bankruptcy reported. The drugstore chain on Sunday became the first large company facing mass opioid liabilities to file chapter 11 without any agreement with opioid plaintiffs, who may end up getting very little from Rite Aid. Other companies facing opioid litigation, including drugmakers Purdue Pharma, Mallinckrodt, Endo and Insys Therapeutics, had all lined up settlements with at least some opioid plaintiffs before filing for bankruptcy. Rite Aid said that it intends to use bankruptcy to cut billions of dollars in financial debt and reduce its store count. It has a proposed deal with bondholders to hand them full equity control. The retailer said it also intends to address various litigation facing the company, including the more than 1,600 opioid lawsuits that have been a drain on its resources. “It’s unusual that there’s no explicit settlement with [opioid] victims, which was the case in most of the other opioid bankruptcy cases,” said Edward Neiger, a lawyer who has represented opioid plaintiffs in other chapter 11 proceedings. The Supreme Court is currently examining Purdue Pharma’s use of chapter 11 to resolve opioid lawsuits and bankruptcy courts’ practice of granting releases from liability for affiliates and other parties tied to a bankrupt company. If the Supreme Court rules against Purdue, the decision could outlaw third-party releases as a tool to forge settlements of opioid lawsuits and other mass torts. That possibility may give Rite Aid and other companies pause before reaching similar deals, Neiger said.
RVL Pharmaceuticals said several of its operating subsidiaries are filing for bankruptcy in a prepackaged deal with lender Athyrium Capital and other key stakeholders, WSJ Pro Bankruptcy reported. The reorganization will give the RVL subsidiaries a pathway to reduce their debt, streamline operations and position themselves under new ownership. RVL will wind down all operations aside from the three subsidiaries that are reorganizing. Shares of RVL will be canceled once the wind-down is finished, expected next year. The company said there will likely be no recovery for public shareholders. Through the reorganization, Athyrium will exchange its outstanding debt into equity in the newly formed entity. The operating subsidiaries that will reorganize are: RevitaLid Pharmaceutical, RVL Pharmaceuticals and RVL Pharmacy.
Envision Healthcare, which is backed by private equity firm KKR & Co and provides outsourced emergency department services to hospitals, on Wednesday received U.S. bankruptcy court approval to split into two companies and cut over $7 billion in debt, Reuters reported. Bankruptcy Judge Christopher Lopez approved Envision's restructuring at a court hearing in Houston. Lopez commended Envision's bankruptcy lawyers for putting together an "incredibly complex" financial transaction while minimizing disruption to patients needing emergency care and the more than 20,000 doctors employed by Envision. "At the end of the day, this is going to remain a viable business, and those people have not been forgotten," Judge Lopez said. The bankruptcy restructuring will split Envision Healthcare into two separate companies, Envision Physician Services (EVPS) and AMSURG. EVPS will focus on providing doctors to hospital emergency rooms, intensive care units and birthing suites, while AMSURG will operate outpatient surgery centers specializing in gastroenterology, ophthalmology and orthopedic care.
Four surgical centers in Connecticut will emerge from bankruptcy under new ownership, according to an application with the Office of Health Strategy, the Hartford Business Journal reported. Wilton Surgery Center, Bloomfield Eye Surgery Center, Connecticut Eye Surgery Center South in Milford and Eastern Connecticut Endoscopy Center in Norwich have filed separate Certificate of Need applications seeking OHS approval of a proposed indirect change in ownership. Nashville, Tenn.-based Envision Healthcare Corp. currently owns the four surgical centers through an affiliate, AmSurg LLC. In May, Envision filed for chapter 11 bankruptcy in the Bankruptcy Court for the Southern District of Texas. As part of the bankruptcy, a creditor — Pacific Investment Management Co. LLC — will take ownership through a subsidiary, according to the application. The court is expected to approve the deal during the fourth quarter of 2023. The facilities will continue to operate under their existing licenses and will provide the same services, according to the application. AmSurg owns more than 250 surgical centers in 34 states. Pacific Investment Management Co., also known as PIMCO, is based in Newport Beach, California.
Bond investors with Preston Hollow Community Capital were the highest bidders in Mercy Iowa City's bankruptcy auction. Preston Hollow Community Capital is a Dallas-based company worth billions of dollars, KWWL.com reported. Operations at the facility will be managed by American Healthcare Systems, which officials say has experience in rehabilitating clinics across the United States. Ownership of the hospital will be organized as a not-for-profit group. Chairman and CEO of Preston Hollow Community Capital Jim Thompson said, "Since making a major financial investment in Mercy Iowa City in 2018, Preston Hollow Community Capital has been committed to ensuring that Johnson County residents can continue accessing critical health care services through a community-based hospital.… The Preston Hollow team is pleased that this critical goal will be met for many years to come now that our bid to acquire the hospital has been approved.” Preston Hollow Community Capital will make "significant" capital investments in order to stabilize the hospital's operations.
After a merger with MEI Pharma was unsuccessful, Infinity Pharma has filed for bankruptcy, just as executives had warned when the deal fell through, FierceBiotech.com reported. The Cambridge, Mass.-based biotech filed for chapter 11 bankruptcy on Friday “after considering all strategic alternatives,” according to a regulatory filing dated Sept 28. The company will continue to operate at a reduced level while a restructuring transaction or asset sale is conducted. At the same time, board member Adelene Perkins resigned from her role as chair. Infinity cut three-quarters of its staff and three board members in July after a planned combination with MEI Pharma fell through. Infinity had warned in March that the merger may be the last chance to avoid bankruptcy for the cancer-focused company. Infinity was developing eganelisib in several mid-stage studies, including urothelial cancer and in solid tumors. As the financial troubles mounted, the company tried to look for a strategic transaction to keep the med going. Ultimately, those efforts did not secure a company-saving deal. Meanwhile, MEI has been trading barbs via press release with two shareholders Anson Funds and Cable Car Capital LLC, as the two firms try to remove board members. On Monday, MEI adopted a stockholder rights plan, also known as a poison pill defense, to try and deter the firms from taking control.
Gardner, Mass.-based Heywood Healthcare has voluntarily filed for chapter 11 protection, the organization announced yesterday, Boston25news.com reported. Heywood Healthcare operates Athol Hospital, Heywood Hospital, Heywood Medical Group, Heywood Rehabilitation Center, Murdock School-based Health Center, The Quabbin Retreat, and Winchendon Health Center. “Core hospital services will continue to operate as usual,” Rozanna Penney, co-CEO of Heywood Healthcare, said in a statement Monday. In a statement on its website, Heywood Healthcare said, “In the midst of the pandemic, Heywood Healthcare and community hospitals across the Country were adversely affected by workforce and supply chain challenges and the revenue shortfalls it caused. Heywood Healthcare was also impacted by a costly and lengthy electronic medical record (EMR) transition, while managing its aging infrastructure, and engagement in a milestone construction project, also significantly impacted by the current economic landscape.” Over the past few months, Heywood Healthcare said that it “has made significant progress. Strong volume, responsible fiscal management, excellent operational stewardship, robust revenue cycle work and a dedicated workforce has contributed to improving its financial performance.”
A telehealth firm based in Charlotte has filed for chapter 11 protection, according to records at the U.S. Bankruptcy Court for the Western District of North Carolina, the Charlotte Business Journal reported. Let's Talk Interactive filed the voluntary bankruptcy petition on Sept. 21. The company's secured and unsecured debt — excluding debts owed to insiders or affiliates — is less than $7.5 million, the filing shows. As a result, the firm was eligible to file for bankruptcy under subchapter five, which doesn't require it to receive creditors' approval for its repayment plan. The company estimated its assets and liabilities totaled between $1 million and $10 million, with an estimated creditors count between 1 and 49. Founded in 2001 by CEO Art Cooksey, Let's Talk Interactive's customizable telehealth solutions give health care and mental health professionals the ability to provide to services in a way that helps eliminate problems with patient accessibility. The company has also partnered with hospitals, assisted living facilities, prisons, rural community centers and disaster relief zones to install its telehealth kiosk machines. These kiosks can help facilitate virtual therapy sessions, videoconferencing, and check-in uses, among other things. Read more.
Don’t miss tomorrow’s abiLIVE as experts will be examining a wide-range of health care distress topics. Register for FREE!
