Steward Health Care System LLC, the largest private physician-owned for-profit healthcare network in the United States, has filed an emergency motion seeking bankruptcy court approval to grant a DIP extension premium to its FILO DIP lenders in exchange for extending the maturity date of its financing facility.
The motion, filed on January 6, 2025, in the U.S. Bankruptcy Court for the Southern District of Texas (Case No. 24-90213), requests authorization for Steward to provide additional claims to its FILO DIP lenders if they purchase or contribute to the purchase of certain "Excess Properties" owned by MPT.
Under the proposed arrangement, the DIP Extension Premium would be calculated as the difference between the floor sale price of each Excess Property and its market value at closing. The premium would be secured by liens on collateral on a pari passu basis with existing obligations.
The healthcare operator, which filed for Chapter 11 protection on May 6, 2024, is seeking this arrangement as part of a broader amendment to its FILO DIP Credit Agreement. The amendment extends the maturity date from December 31, 2024, to January 31, 2025, and includes waivers of certain alleged defaults and covenant compliance requirements.
As of the filing date, Steward operated 31 hospitals across eight states, with approximately 400 facility locations and 30,000 employees serving more than two million patients annually. The company currently has approximately $255.5 million in outstanding principal amount of term loans plus accrued interest under the FILO DIP Facility.
The motion, filed by Weil, Gotshal & Manges LLP and Latham & Watkins LLP as proposed counsel for the debtors, emphasizes that the Creditors' Committee supports the DIP Extension Premium arrangement. A hearing is scheduled for January 13, 2025, at 3:00 P.M. Central Time.
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