On Friday, InSight Health Services Holdings Corporation and a number of affiliates voluntarily filed for chapter 11 bankruptcy protection in the Southern District of New York bankruptcy court with a prepackaged chapter 11 plan of reorganization in place. These cases mark the second prepackaged chapter 11 filing for the companies in less than three and a half years; the companies also filed prepackaged cases in May of 2007. The companies, which are represented by Kirkland & Ellis LLP in the current bankruptcy cases, provide diagnostic medical imaging services, including magnetic resonance imaging (“MRI”), positron emission tomography/ computed tomography (“PET/CT”), traditional computed tomography (“CT”), mammography, bone densitometry, ultrasound and x-ray services, through a network of 62 fixed-site imaging centers and 104 mobile facilities.
In the 2007 cases, InSight Health converted almost $200 million in subordinated unsecured debt into common equity. However, they now say that the 2007 deleveraging proved insufficient to solve their financial woes as demand for the companies’ services has continued to decline since emergence from those cases. As a result, the companies began new debt restructuring discussions with their secured creditors this fall and have received agreement from over two-thirds of secured noteholders on the terms of the current restructuring proposal. Pursuant to this proposal, senior secured note claims will be converted to equity, while general unsecured claims will be unimpaired. Existing equityholders will be largely wiped out, but will receive warrants to acquire up to two percent of the reorganized equity on a fully-diluted basis.
Key court filings to date include (click on the title of any document for more information or to purchase):
- Debtors’ Prepackaged Joint Chapter 11 Plan of Reorganization
- Debtors’ Disclosure Statement for the Debtors’ Prepackaged Joint Chapter 11 Plan of Reorganization
- Debtors’ Motion for Entry of Interim and Final Orders Authorizing, but Not Directing, the Debtors to (A) Pay Certain Prepetition Compensation and Reimbursable Employee Expenses, (B) Pay and Honor Employee Medical and Other Benefits and (C) Continue Employee Wages and Benefits Programs
- Debtors’ Motion for the Entry of Interim and Final Orders Establishing Notification and Hearing Procedures for Transfers of Certain Equity Securities and Granting Related Relief
- Debtors’ Motion for Entry of Interim and Final Orders (A) Authorizing the Debtors to Obtain Postpetition Financing and Letters of Credit (B) Authorizing the Debtors to Use Cash Collateral, (C) Granting Adequate Protection to Prepetition Secured Lenders and (D) Scheduling a Final Hearing
- Debtors’ Motion for Entry of an Order (A) Scheduling an Objection Deadline and Combined Hearing on Their Disclosure Statement and Plan Confirmation, (B) Approving Form and Notice of Confirmation Hearing, (C) Establishing Procedures for Objections to Their Plan and Disclosure Statement, (D) Approving Solicitation Procedures, (E) Waiving the Requirement for Meetings of Creditors or Equity Holders and (F) Granting Related Relief
- Declaration of Keith S. Kelson of InSight Health Services Holdings Corp. (I) In Support of Debtors’ Chapter 11 Petitions and First Day Motions and (II) Pursuant to Local Bankruptcy Rule 1007-2
For access to all major pleadings filed in this case, please visit http://www.chapter11cases.com/InSight-Health-Services-Holdings-Corp2010_c_1882.html