Downey Regional Medical Center Emerges From Chapter 11
Downey Regional Medical Center (DRMC) announced that it has emerged from Chapter 11 reorganization proceedings through closing of its exit financing in a $52 million loan transaction. Under its exit financing, Downey Regional issued $32 million in new taxable bonds through the Independent Cities Financing Authority and entered into a $20 million A/R facility with Midcap Financial LLC.
On September 14, 2009, the hospital filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code citing financial systems breakdowns and poor contracts as its reasons for filing. Following substantial restructuring of its contracts and significant improvements to its financial systems, Downey Regional obtained final court approval of its Plan of Reorganization on February 16, 2012, with the exit financing closing on March 7, 2012.
“Downey Regional Medical Center’s recovery is a success story almost without parallel. Hospitals don’t usually survive bankruptcy intact, let alone unaffiliated, let alone during a severe national recession and an economy that did not support viable capital markets. We are especially proud that during our reorganization, we were able to continue normal business operations, including the emergency room and provide excellent patient care to our community,” said Kenneth Strople, president and CEO of Downey Regional Medical Center.
“Emerging from bankruptcy protection was truly a collaborative effort and could not have been achieved without the strong leadership of the Hospital’s administration, together with the dedication of the physicians, nurses and staff who serve the community. I want to sincerely thank everyone for all their support,” added Strople
Hospital operations were improved during the Chapter 11 process; the Hospital purchased a new Cath Lab, new general chemistry machines and digital mammography technology, all while paying down over $17 million to creditors. Creditors will continue to receive payments while the hospital continues improving its financial performance over the next several years.
Previously on abfjournal.com: