😷New Chapter 11 Filing - Astria Health😷

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Astria Health

May 6, 2019

Astria Health, a large non-profit healthcare system based in Eastern Washington, has filed for bankruptcy along with a dozen or so affiliates. The company blames its chapter 11 filing on regulatory approval processes that stunted expansion plans, poor collections on accounts receivable, and charitable care that, despite best efforts, hadn’t been offset by charitable contributions. All of these issues have squashed cash flow and triggered issues with the debtors’ secured debt, part of which is uber-expensive. The debtors intend to use their DIP credit facility to take out their expensive “high cost of capital” MidCap Financial Trust-provided (and other) debt; they also hope to use the “breathing spell” provided by the automatic stay to remedy their collections problems and march towards a plan of reorganization within 150 days.

  • Jurisdiction: E.D. of Washington (Judge Kurtz)

  • Capital Structure: $72mm secured debt

  • Professionals:

    • Legal: Dentons US LLP (Samuel Maziel) & (local) Bush Kornfeld LLP (James Day)

    • Claims Agent: KCC (*click on the link above for free docket access)

  • Other Parties in Interest:

    • DIP Lender: JMB Financial Advisors

      • Legal: Arent Fox LLP (Robert Hirsh, Jordana Renert) & (local) Southwell & O’Rourke (Kevin O’Rourke)

New Chapter 9 Filing - The Kennewick Public Hospital District

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The Kennewick Public Hospital District (aka Trios Health)

  • 6/30/17 Recap: Now this is a different kind of healthcare bankruptcy filing. The District, which does business as Trios Health, was established in Benton County Washington by state statute in 1948 and is governed by a seven-member publicly-elected Board of Commissioners; it is one of the largest multi-specialty medical groups in Eastern Washington comprised of 2 hospitals and 10 urgent/outpatient care centers. To "remain competitive and retain market share," the District expanded and invested in improvements. This included a new hospital facility in a "relatively affluent" area, as well as the construction of complementary medical office space. This was all state-of-the-art. Which of course costs a boatload of dough (see capital structure info below). And so the Board issued revenue bonds secured by gross revenues and a subsequent bond secured by taxes. Of course, all of the foregoing was predicated upon a feasibility study that baked in revenue projections. And counted on revenue from HMO and PPO plans offered by Group Health. Want to guess how that all played out? Well, let us tell you. The projections were inflated. Shocker right? To be fair, the District's competitor, Kadlec, negotiated for the exclusion of the District from the Group Health Plans; it also opened a competitive emergency room nearby. So revenues failed to live up to expectations while secured obligations lived up to expectations. Creditors weren't happy and the District felt forced into action. Hence, Chapter 9. 
  • Jurisdiction: E.D. of Washington (Corbit)
  • Capital Structure: see below.     
  • Company Professionals:
    • Legal: Foster Pepper PLLC (Jack Cullen, Bryan Glover, Andy Morton, Ella Vincent)
    • Claims Agent: Garden City Group LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Official Committee of Unsecured Creditors
      • Legal: Arent Fox LLP (Andrew Silfen, George Angelich, Jordana Renert) & (local) Hillis Clark Martin & Peterson P.S. (Bradley Duncan, Josh Rataezyk)
    • Creditor: Kennewick Holdings LLC
      • Legal: Gibson Dunn & Crutcher LLP (Jeffrey Krause, Matthew Kelsey, Jason Goldstein) & (local) Davis Wright Tremaine LLP (Ragan Powers, Hugh McCullough)
Page 5 of First Day Declaration

Page 5 of First Day Declaration

Updated 10/5/17