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Springfield (Vt.) Medical Care Systems on Wednesday filed for chapter 11 protection but said its hospital and health centers will remain open and operating through the process, Valley News reported. No layoffs are planned, and the health-care organization, which includes Springfield Hospital, plans to hold community meetings next month in Springfield, Ludlow, Bellows Falls, Londonderry, and Charlestown. “The health centers and hospital are not closing. Patient health and safety remain our top priority and we will continue to provide excellent health care to the region during the reorganization process,” Joshua Dufresne, Springfield Medical Care System’s acting CEO, said in a statement. Hospital officials earlier this month said bankruptcy was possible as the health-care system tries to restructure approximately $6 million in debt to vendors and about $12 million in bank debt. 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. 

Joerns Healthcare LLC, a medical equipment maker whose owners include private-equity firms Quad-C Management Inc. and Aurora Capital Partners, sought bankruptcy protection with a reorganization plan that would reduce its debt to $80 million from $400 million, the Wall Street Journal reported. The chapter 11 proceedings, which began on Monday, would convert into equity most of the company’s first-lien loans and all of its second-lien bonds, according to court papers in the U.S. Bankruptcy Court in Wilmington, Del. Joerns makes medical-bed frames, therapeutic-support surfaces, patient lifts, wound-therapy devices and other durable medical equipment and supplies under brands that include Hoyer. Chief Financial Officer John Regan said in court papers that Joerns faced a number of challenges, including the extent to which its customers’ financial troubles had begun hurting its own liquidity.

An Arizona attorney has been appointed to represent patients in the Astria Health bankruptcy case, the Yakima (Wash.) Herald-Republic reported. Susan Goodman of Mesch, Clark & Rothschild in Tucson, Ariz., will serve as a patient-care ombudsman in the case. Astria Health filed for chapter 11 protection on May 6, citing cash flow issues due to a vendor’s problems with billing and collecting payment for services. The organization is aiming to emerge from bankruptcy by year’s end. Goodman has served or is currently serving in the same role in nearly 30 health care bankruptcies across the country, including that of the Kennewick Public Hospital District in 2017, according to bankruptcy filings. 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. 

Bankruptcy Judge Frank Kurtz ruled yesterday that Astria Health could obtain an additional $8 million in debtor-in-possession financing, the Yakima (Wash.) Herald reported. When Sunnyside, Wash.-based Astria Health filed for bankruptcy in early May, it revealed plans to secure $36 million from JMB Capital Partners to stabilize its finances while it went through bankruptcy. Judge Kurtz approved $28 million of that amount just days after the bankruptcy filing. Astria used the funds to help cover payroll as well as pay off more than $21 million it owed to two secured lenders, Banner Bank, and MidCap Lenders. Yesterday’s ruling hinged on whether Lapis Advisers, Astria Health’s largest creditor, would have adequate protection with the new debt Astria Health was accumulating through the debtor-in-possession financing. Lapis Advisers, which loaned Astria $44.5 million, was concerned its financial interests wouldn’t be protected if something went wrong with Astria Health’s plan to emerge from bankruptcy. To that end, Lapis Advisers requested additional provisions to ensure adequate protection, such as monthly payments. Astria Health has maintained that issues collecting revenue caused cash flow issues that led it to file for bankruptcy. They believe with a new vendor, they will be able to resolve that issue and emerge from bankruptcy by year’s end.

Wayne State University is fronting what could potentially total more than $16 million in payments for the School of Medicine's faculty practice, University Physician Group, to rebuild after bankruptcy, Crain's Detroit Business reported. The U.S. Bankruptcy Court in Detroit last Monday approved UPG's reorganization plan and exit from bankruptcy after the nonprofit medical practice suddenly filed for chapter 11 protection in November. After "extensive negotiations" with UPG, Wayne State agreed to provide financial assistance under a restructuring support agreement, according to a version of the reorganization plan submitted April 9. Wayne State is, in essence, acting as a bank, providing exit financing to UPG for general unsecured creditor claims (it's excluding claims by Wayne State and an affiliated nonprofit Fund for Medical Research and Education). A 15-year term loan from Wayne State will be used to pay 80 percent of unsecured claims that are currently projected at approximately $10.7 million, but could rise as court proceedings are finalized, according to a document in the U.S. Bankruptcy Court in Detroit. The Detroit university is also providing a revolving loan of at least $2.5 million that could range up to $7.5 million for UPG's working-capital needs.

Wayne State University School of Medicine's faculty practice, University Physician Group (UPG), has emerged from bankruptcy, Crain's Detroit Business reported. The U.S. Bankruptcy Court in Detroit on Monday approved University Physician Group's reorganization plan and its exit from bankruptcy protection after the nonprofit medical practice suddenly filed for chapter 11 in November. UPG said in court documents filed in November that it planned to continue operating, move its corporate administrative functions to Midtown Detroit and focus on being the "premier academic clinical practice" for the Detroit Medical Center. The filing was driven by discovery earlier in the year that financial losses of the 20-year-old faculty practice plan were double the $5.5 million expected and that a new, more drastic turnaround plan was required, Crain's reported at the time. Over the past decade, UPG's number of physicians has declined by 50 percent, which has hurt clinical revenue and made its leased network of suburban offices untenable, the filing said. The court-approved reorganization plan created with consulting firm AlixPartners will help determine the future of UPG. It is expected to carry UPG from its 2018 loss of $8.1 million to $3 million in profit by 2022. Wayne State University is financially supporting UPG's efforts to pay back debts and rebuild through a restructuring support agreement.

The owners stopped making mortgage payments on their crown jewel, the Rosewood Care Centers, barely a year after buying it in 2013. Paperwork about the chain’s finances was never filed with the government. In the end, the business defaulted last year on $146 million in government-backed mortgages — the biggest collapse in the history of a little-known loan-guarantee program run by the Department of Housing and Urban Development, the New York Times reported. The Rosewood situation demonstrates the problems plaguing the HUD program, which helps nursing homes obtain affordable loans and has become a linchpin of the American elder-care system. By the government’s own admission, the federal agency’s stewardship of the program has been haphazard. HUD officials described Rosewood as an outlier, saying that only 1 percent of the guaranteed loans end up defaulting. “Mortgage defaults in this program are exceedingly rare, yet reaching an acceptable resolution requires an owner’s willingness and ability to work on behalf of their residents,” the department said in a statement. But the program — run by a department better known for fostering affordable housing — is a vulnerability for the federal agency. The nursing home industry is increasingly being run by for-profit operators facing dwindling margins. Some homes — especially those in rural areas — are struggling to stay open, with operators blaming low occupancy and insufficient payments from Medicaid and Medicare.