Introduction

 

On January 30, 2017 (the "Petition Date"), LMCHH PCP LLC and Louisiana Medical Center and Heart Hospital, LLC (the "Debtors") filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.

 

The Debtors are represented by Alston & Bird LLP as lead counsel and Young, Conaway, Stargatt & Taylor as Delaware counsel.  The case has been assigned to the Honorable Judge Laurie Selber Silverstein. A hearing on the Debtors' first day motions is scheduled for February 3, 2017. A meeting to form the Official Committee of Unsecured Creditors has not yet been scheduled.

 

Background

 

Headquartered in Lacombe, LA, the Debtors developed, owned, and operated an acute care hospital, which opened as a cardiology and spine center.  The Debtors employ approximately 677 individuals as of the Petition Date. The Hospital specializes in the treatment of cardiovascular disease and injuries affecting the spine. In addition to cardiovascular and spine care, the Debtors offer a full range of inpatient and outpatient medical, surgical, and diagnostic services covering more than 35 specialties including orthopedics, vascular and general surgery, urology, gastroenterology, and neurology.

 

Through various court filings, the Debtors indicate that they have encountered financial difficulty due to the growth of population in the area, and the Debtors providing treatment to more patients, the Debtors were unable to generate sufficient revenue to cover operating costs.  The Debtors plan on trying to sell their businesses as a going concern, but, if they cannot, they will conduct an orderly wind down of the facility.

 

Financial Condition

 

As of the Petition Date, Medcath Financing Company, LCC is owed approximately $21,763,903 under a real estate note and loan agreement. Cardiovascular Care Group, Inc. is owed approximately $104,342,442 under a demand note. MidCap Financial, LLC is owed $6,729,460.83 under a revolving line of credit.

 

Motion for DIP Financing 

 

The Debtors are seeking authority to enter into a Debtor-in-Possession facility with MedCare Investment Fund V, L.P. in the amount of $1 million on an interim basis, and $4.2 million on a final basis. The Debtors are also requesting the use of cash collateral.

 

Wages and Benefits Motion

 

The Debtors seek authority to pay certain employee obligations and maintain and continue employee benefits programs and schedule a final hearing on the motion.

 

As of the Petition Date, the Debtors employ approximately forty-three (43) salaried physicians, thirty-four (34) contract physicians, and approximately six hundred (600) full time equivalent employees. The Debtors owe approximately $1.2 million of unpaid accrued wages, salaries, gratuities, overtime pay and other compensation. The Debtors assert that no employee is being paid more than the $12,850 statutory cap on prepetition wages

Motion to Enter into Contractor Physician Services Agreements

The Debtors intend to reject current employment contracts with the doctors they employ.  They have requested authority to enter into Independent Contractor Physician Services Agreements with their doctors so that they can prepare for a potential wind down in the event that they cannot find a purchaser for their businesses.  The Debtors argue that the motion to authorize the new arrangement with their doctors will ensure safe and continuous high level of care for its patients should the facility require a shut down.

 

If we can be of service, please contact me.

 

Rafael X. Zahralddin-Aravena

Commercial Bankruptcy and Commercial Restructuring Chair

Elliott Greenleaf

The I.M. Pei Building

Wilmington, Delaware 19899

Direct: 302-384-9401

Cell: 302-545-2888