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Vivus Inc., which filed for bankruptcy with plans to be acquired by Carl Icahn’s investment firm, received interim court approval to preserve $648 million in net operating losses that could be used to reduce future taxes, WSJ Pro Bankruptcy reported. The Campbell, Calif.-based maker of an obesity treatment and other drugs filed for bankruptcy on Tuesday after reaching a deal with IEH Biopharma LLC, an Icahn Enterprises LP subsidiary, on a debt-for-equity swap. Under the company’s pre-packaged plan, IEH would take full ownership of Vivus in return for canceling about $145 million of the company’s debt. Vivus said it has three drugs: Qsymia, for weight loss; Pancreaze, which treats a pancreatic disorder; and Stendra, which treats erectile dysfunction. The company yesterday asked the U.S. Bankruptcy Court in Wilmington, Del., for permission to limit trading of its shares in hopes of preserving the net operating losses as well as $12 million in tax credits. The potential tax breaks are “part of the fabric” of a proposed restructuring that will benefit several groups, Vivus said in court filings. Under the plan, general unsecured creditors, such as those providing goods and services, would be paid in full, court filings said. As of the date of the bankruptcy, they are owed about $27.5 million.

Brentwood, Tenn.-based Quorum Health has emerged from bankruptcy, about three months after entering the chapter 11 restructuring process, Becker's Hospital Review reported. Quorum, a spinoff of Franklin, Tenn.-based Community Health Systems, filed for bankruptcy in early April. The for-profit company asked the bankruptcy court to expedite approval of its restructuring plan, and the court approved the $1.3 billion plan June 29. Quorum exited bankruptcy with approximately $500 million less debt and a new CEO and board of managers. The company named Joey Jacobs CEO. Jacobs, who most recently served as chair and CEO of Franklin, Tenn.-based Acadia Healthcare, will also serve on Quorum's board of managers. Quorum's board of managers will be led by Catherine Klema, president of Nettleton Advisors, a financial and strategic advisory firm for healthcare organizations.

The owner of the historic Ceresota senior apartment building in Minneapolis’ Mill District filed for bankruptcy last week, after defaulting on a bank agreement, the Minneapolis Star Tribune reported. The Ceresota Funding II LLC filed for chapter 11 protection in court on July 1, stating it had both assets of between $10 million to $50 million and liabilities of $10 million to $50 million and up to 49 creditors. John Lamey III, the attorney filing the bankruptcy on behalf of Ceresota Funding II President Ross Dworsky, wrote in an e-mail that the bankruptcy reorganization “filing was to preserve that business on an ongoing basis. The filing was done to stave off a foreclosure by a mortgage holder. We filed the morning of the sheriff sale.” Late Tuesday, the facility’s tax credit investor, MinnWest Bank, filed a motion asking a federal court to dismiss the bankruptcy case. Minn­West Bank said that it notified the managing member of Ceresota on Jan. 20 that the Ceresota project was in “material default.” It also said that in March, it exercised its right to become the managing member of the project and that it never authorized any bankruptcy filing. A July 29 court hearing is scheduled.

Endologix Inc., which makes medical devices for aortic disorders, has filed for chapter 11 protection and agreed to a plan of reorganization supported by Deerfield Partners, its largest creditor, that will take it private, the Los Angeles Business Journal reported. Irvine, Calif.-based Endologix said that “after evaluating a variety of strategic options,” it decided the bankruptcy filing provided “the best path to address financial challenges resulting from COVID-19 and the related delays in elective medical procedures and to realize the full benefits of operational enhancements made over the past two years.” Endologix’ stock plummeted to a record low Monday after the announcement and was trading at 25 cents a share by late afternoon trading, down 68 percent from Friday’s close. Under the terms of the reorganization plan, Endologix will become a private company and said it expects to emerge well-capitalized by the end of the third quarter of 2020 and positioned for long-term growth.

Quorum Health Corp. won a bankruptcy judge’s approval to exit bankruptcy with its debt cut by $500 million, beating back a hedge-fund shareholder that said the hospital operator had deliberately undervalued itself, WSJ Pro Bankruptcy reported. Judge Karen Owens of the U.S. Bankruptcy Court in Wilmington, Del., indicated she would confirm the company’s chapter 11 exit strategy after holding a trial that centered around Quorum’s valuation and the federal coronavirus relief dollars it has received. Hedge fund Mudrick Capital Management LP, which owns a 15 percent stake in Quorum, argued that the company wasn’t justified in wiping out equity and handing control to bondholders, given its infusion of government aid. Mudrick also argued that the company acted in bad faith, saying that Quorum understated what it would get in federal grants, hid grants that it did get, and “consistently invented” amounts it could have to return to the government. By doing so, Mudrick said, Quorum was playing down its liquidity and depressing its value to leave shareholders out of the money. Under the chapter 11 plan, bondholders that include Davidson Kempner Capital Management LP and GoldenTree Asset Management LP are in line to take over the company when it leaves bankruptcy.

At least 42 hospitals across the U.S. have closed or entered bankruptcy this year, and the financial challenges caused by the COVID-19 pandemic may force more hospitals to do the same in coming months, according to an analysis in Becker's Hospital Review. COVID-19 has created a cash crunch for many hospitals across the nation. They're estimated to lose $200 billion between March 1 and June 30, according to a report from the American Hospital Association. More than $161 billion of the expected revenue losses will come from canceled services, including nonelective surgeries and outpatient treatment. Moody's Investors Service said the sharp declines in revenue and cash flow caused by the suspension of elective procedures could cause more hospitals to default on their credit agreements this year than in 2019. Read more.

For more on hospital and health care insolvencies, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition from the ABI Bookstore. 

Proteus Digital Health Inc., a pioneer in the use of sensors to track whether patients are taking their medication, filed for bankruptcy protection Monday, with little to show for the hundreds of millions of dollars it received from venture-capital investors, WSJ Pro Bankruptcy reported. Under chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Del., Proteus said that it would continue efforts to find a buyer. In court papers, Proteus described itself as “pre-revenue” and said it had about $15 million in unpaid bills as well as lease obligations on its Redwood City, Calif., headquarters. Proteus makes sensors embedded in pills that, among other things, signal smartphones once the pill reaches the gut so doctors can track whether patients are taking their medication. The chip ultimately passes through the digestive tract normally. Stocked up with hundreds of patents, the maker of smart pills is unable to find more funding in capital markets roiled by the Covid-19 pandemic, court papers say. Big Proteus stakeholders include Novartis International AG and Medtronic Inc., as well as Kaiser Permanente Ventures, PepsiCo and Yuan Capital of Hong Kong. Past backers include Carlyle Group and Oracle Corp.