A New York bankruptcy judge approved the $125 million sale of medical laundry and linen management company Angelica to KKR.

KKR Credit Advisors was put on a direct path to purchase Angelica late last month when the hospital servicer canceled an auction and asked U.S. Bankruptcy Judge James L. Garrity Jr. to approve an asset purchase agreement the parties had reached before it filed for bankruptcy in early April.

Angelica entered bankruptcy after years of substantial declines in revenue that it attributed to regulatory changes in the healthcare industry. In addition, the company recently lost its largest customer. According to court filings, Angelica entered bankruptcy with total assets and liabilities above $200 million.

KKR, one of Angelica’s secured lenders, became the company’s stalking horse bidder because it was willing to pay more cash than other potential purchasers, and its offer included a credit bid component on account of a portion of its prepetition debt.

To finance operations during a fast-track restructuring process, Angelica negotiated a $65 million debtor-in-possession loan from secured prepetition lenders Wells Fargo Capital Finance and Regions Bank.

Angelica is a provider of linen services to the health care industry and serves more than 3,800 hospitals, clinics and long-term care facilities across the country.