Verity Health System of California, a nonprofit healthcare system, filed voluntary petitions for protection under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Central District of California – Los Angeles division.
“After a diligent process of assessing all possible options alongside our financial and legal advisors, Verity Health has made the best strategic decision for all of our patients, employees and other stakeholders,” said Rich Adcock, CEO of Verity Health. “Despite many efforts over the last decade to create opportunities for success, we can no longer swim against the tide of our operating reality, which includes a legacy burden of more than a billion dollars of bond debt and unfunded pension liabilities, an inability to renegotiate burdensome contracts, the continuing need for significant capital expenditures for seismic obligations and aging infrastructure.”
Verity secured debtor-in-possession financing of up to $185 million. This additional liquidity will enable continued operations without interruption to high-quality patient care, employees and suppliers throughout the Chapter 11 process. Verity Health plans to consummate sales under Section 363 of the U.S. Bankruptcy Code. Potential buyers will have the opportunity to submit offers to acquire assets, including
According to documents filed with the court, Ally Bank is the administrative agent for the DIP facility. Ally intends to hold the entire DIP facility on the closing date, but reserves the right to assign and grant participations in the revolving loans and revolving commitments.
