In re NORTHWEST HEALTH SYSTEMS, INC., Chapter 11, Debtor.
United States Bankruptcy Court, E.D. Washington.
July 21, 2016.
Northwest Health Systems, Inc., Debtor, represented by Barry W. Davidson, Davidson Backman Medeiros.
US Trustee, U.S. Trustee, represented by Gary W. Dyer, U S Trustee’s Office, James D. Perkins, U S Dept of Justice/U S Trustee Office.
FINDINGS OF FACT AND CONCLUSIONS OF LAW RE: CONFIRMATION OF PLAN OF REORGANIZATION
FREDERICK P. CORBIT, Bankruptcy Judge.
This matter came on for hearing upon the Plan of Reorganization that was filed by Northwest Health Systems, Inc. (“NWHS”) on March 31, 2016. The Court considered the comments of counsel, and the records and files herein, including the following:
• First Order Authorizing Rejection of Executory Contracts [Dkt. No. 108];
• Second Order Authorizing Rejection of Executory Contracts [Dkt. No. 109];
• Order: (1) Authorizing Sale Of Assets Free And Clear Of Liens, Claims, Encumbrances, And Other Interests Pursuant To 11 U.S.C. § 363; (2) Authorizing Assumption And Assignment Of Executory Contracts And Unexpired Leases; (3) Granting Related Relief; And (4) Shortening Time [Dkt. No. 252];
• Disclosure Statement [Dkt. No. 317] (the “Disclosure Statement”);
• Plan Of Reorganization [Dkt. No. 318] (the “Plan”);
• Notice Of Filing Of Written Disclosure Statement And Proposed Plan Of Reorganization [Dkt. No. 320];
• Notice Of Hearing Re: Approval Of Disclosure Statement [Dkt. No. 330];
• Order Authorizing Assumption And Rejection Of Executory Contracts And Unexpired Leases [Dkt. No. 335];
• Memorandum In Support Of Approval Of Disclosure Statement [Dkt. No. 336];
• Order Approving Disclosure Statement And Setting Confirmation Hearing [Dkt. No. 341] (the “Order Approving Disclosure Statement”);
• Supplement To Disclosure Statement And Plan Of Reorganization Re: Executory Contracts And Unexpired Leases [Dkt. No. 355];
• Declaration Of Barry W. Davidson Re: 1) Supplement To Disclosure Statement And Plan of Reorganization; And 2) Revised Exhibits To Disclosure Statement: a. Exhibit A — Schedule Of Secured Claims; b. Exhibit B — Schedule Of Priority Tax Claims; c. Exhibit C — Schedule Of Priority Wage Claims; d. Exhibit D — Schedule Of Unsecured Claims; e. Exhibit F — Liquidation Analysis [Dkt. No. 356];
• Notice Of Approval Of Disclosure Statement, And Matters Relating To Confirmation Of Plan [Dkt. No. 357];
• Certificate Of Service [Via First Class U.S. Mail] [Dkt. No. 358];
• Report Of Balloting [Dkt. No. 388];
• Order Authorizing Change Of Ballot [Dkt. No. 396];
• Motion For Order Temporarily Allowing Claim of McKesson Medical-Surgical Minnesota Supply, Inc. [Dkt. No. 401];
• Amended Report Of Balloting [Dkt. No. 405];
• Declaration Of Kevin D. King In Support Of Confirmation Of Plan Of Reorganization [Dkt. No. 406] (the “Declaration of King”); and
• Memorandum In Support Of Confirmation Of Plan Of Reorganization [Dkt. No. 407];
Based on the foregoing, the Court enters the following FINDINGS OF FACT:
1. NWHS filed a Disclosure Statement and Plan on March 31, 2016.
2. On May 19, 2016, following appropriate motion and notice, the Court entered the Order Approving Disclosure Statement.
3. NWHS transmitted the Order Approving Disclosure Statement, Disclosure Statement, the Plan, and related materials to the Master Mailing List on June 8, 2016.
4. Similar claims are classified appropriately in each class. The Plan provides the same treatment for each claim or interest within a particular class.
5. NWHS did not solicit acceptances or rejections of the Plan except as authorized by the Order Approving Disclosure Statement.
6. The Plan provides for payment of the balance of any allowed priority non-tax claims on the Effective Date of the Plan. Allowed priority tax claims shall receive full payment of such claims on the effective date of the Plan.
7. The Plan has been proposed in good faith and not by any means forbidden by law.
8. The compensation of Davidson Backman Medeiros PLLC and Anastasi, Moore & Martin, PLLC for services rendered through the confirmation date will be subject to Court approval after notice and hearing. Davidson Backman Medeiros PLLC and Anastasi, Moore & Martin, PLLC will be employed after confirmation at their normal and usual hourly rates, plus reimbursement for expenses.
9. NWHS will take all actions that are needed to implement the terms of the Plan, and will then close this case. There will be no insiders employed, retained, or compensated by NWHS after confirmation, although Mr. Kevin D. King will continue to serve as an officer of NWHS to implement the Plan.
10. The Plan provides for no rate changes after confirmation of the Plan with any governmental regulatory commission with jurisdiction over the rates of NWHS.
11. Class 3 is impaired. All ballots cast by Class 3 claimants were votes for acceptance of the Plan.
12. As evidenced by the Declaration of King and the Liquidation Analysis attached to the Disclosure Statement, creditors will receive a greater distribution under the Plan than creditors would receive if the assets of NWHS were liquidated by a Chapter 7 Trustee or by any other means.
13. The Plan provides for the liquidation of the assets of the bankruptcy estate of NWHS and the distribution of funds to the holders of Allowed Claims in accordance with their statutory priority. There will be no need for further financial reorganization.
14. The Plan provides for payment of administrative claims upon allowance by the Court.
15. The Plan provides for payment of all U.S. Trustee fees when due, through the closing of the case.
16. All NWHS contributions to employee benefit plans have been paid. The NWHS 401k Plan has been terminated. The participants will receive their final statement after the end of this calendar quarter. NWHS has no remaining retiree benefits.
17. No objections to confirmation of the Plan were filed.
Based on the foregoing FINDINGS OF FACT, the Court enters the following CONCLUSIONS OF LAW:
1. The Plan has been accepted in writing by the creditors and equity security holders whose acceptance is required by law; and
2. The provisions of Chapter 11 have been complied with; the Plan has been proposed in good faith and not by means forbidden by law; and
3. Each holder of a claim or interest has accepted the Plan or will receive or retain under the Plan, property of a value, as of the Effective Date of the Plan, that is not less than the amount that such holder would receive or retain if NWHS was liquidated under Chapter 7 of the Code on such date, the Plan does not discriminate unfairly, and is fair and equitable with respect to each class of claims or interests that are impaired under the Plan; and
4. All payments made or promised by NWHS by a person issuing securities or acquiring property under the Plan or by any other person for services or for costs and expenses in, or in connection with, the Plan and incident to the case, have been fully disclosed to the Court and are reasonable or, if to be fixed after confirmation of the Plan, will be subject to approval of the Court; and
5. The identity, qualifications, and affiliations of the persons who are to be directors or officers, if any, of NWHS after confirmation of the Plan have been fully disclosed, and the appointment of such persons to such offices or the continued appointment of such persons to such offices, or their continuance therein, is equitable and consistent with the interests of the creditors and equity security holders and with public policy; and
6. The identity of any insider that will be employed or retained by NWHS and their compensation has been fully disclosed; and
7. Confirmation of the Plan is not likely to be followed by the need for further financial reorganization of NWHS; and
8. The Plan shall be substantially consummated pursuant to 11 U.S.C. § 1101(2) upon commencement of distributions under the Plan, upon full payment of all administrative expenses, and upon the conclusion of all contested matters.
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