Steward files for Chapter 11 to support restructuring

 BY Fraser Tennant

In what has been described as the biggest hospital bankruptcy in decades, healthcare provider Steward Health Care has filed for Chapter 11 bankruptcy protection. 

Among the factors driving the filing are insufficient reimbursement by government payors as a result of decreasing reimbursement rates, skyrocketing labour costs, increased material and operational costs due to inflation, and the continued impacts of the coronavirus (COVID-19) pandemic.

The company intends to resolve the Chapter 11 process as quickly as possible, with the help of the court, with a view toward the long term, sustainable financial health of the system.

“Steward Health Care has done everything in its power to operate successfully in a highly challenging healthcare environment,” said Ralph de la Torre, chief executive of Steward. “Filing for Chapter 11 restructuring is in the best interests of our patients, physicians, employees and communities at this time.”

In addition, Steward is finalising the terms of debtor-in-possession financing from Medical Properties Trust for initial funding of $75m and up to an additional $225m upon the satisfaction of certain conditions acceptable to Medical Properties Trust.

“With the additional financing in this process, we are confident that we will keep hospitals open, supplied, and operating so that our care of our patients and our employees is maintained,” continued Mr de la Torre. “By working collaboratively with stakeholders in this court-supervised controlled environment, and having the benefit of our earlier strategic efforts.”

Based in Dallas, Steward currently operates more than 30 hospitals across Arizona, Arkansas, Florida, Louisiana, Massachusetts, Ohio, Pennsylvania and Texas. It is the US’ largest physician-led, minority-owned, integrated healthcare system.

The company does not expect any interruptions in its day to day operations, which will continue in the ordinary course throughout the Chapter 11 process. Steward’s hospitals, medical centres and physician’s offices are open and continuing to serve patients and the broader community.  

Mr de la Torre added: “Steward will be better positioned to responsibly transition ownership of its Massachusetts-based hospitals, keep all of its hospitals open to treat patients, and ensure the continued care and service of our patients and our communities.”

News: US hospital network Steward files for bankruptcy, aims for new loan

Express Inc files for Chapter 11 bankruptcy protection

BY Richard Summerfield

Clothing retailer Express Inc has filed for Chapter 11 bankruptcy protection and announced its intention to close more than 100 retail locations across its portfolio of brands

According to the filing with the bankruptcy court in Delaware, Express has assets and liabilities in the range of $1bn to $10bn.

The company has a stable of brands including Express, Bonobos and UpWest Express. According to its website, Express operates around 530 Express retail and Express Factory Outlet stores in the US and Puerto Rico and around 12 UpWest retail stores, in addition to online operations for these brands.

In a statement announcing the filing, Express noted that it filed for bankruptcy to “facilitate” a sale process of most of its retail stores and operations to the investor group, which includes WHP, Simon Property Group and Brookfield Properties. The company received a nonbinding letter of intent from the investors to buy the assets and has also secured $35m in new financing from some of its existing lenders, subject to court approval. Express also secured $49m in cash from the IRS related to the CARES Act – a critical influx of liquidity that the company had been waiting on to shore up its balance sheet.

The company also named Mark Still as its new chief financial officer (CFO), effective immediately. Mr Still had served as interim CFO since November 2023.

“We continue to make meaningful progress refining our product assortments, driving demand, connecting with customers and strengthening our operations,” said Stewart Glendinning, chief executive of Express. “We are taking an important step that will strengthen our financial position and enable Express to continue advancing our business initiatives. WHP has been a strong partner to the Company since 2023, and the proposed transaction will provide us additional financial resources, better position the business for profitable growth and maximize value for our stakeholders.

“Express has a strong portfolio of brands and a premier omnichannel platform,” he continued. “Our top priority remains providing our customers with the contemporary styles and value they expect from us. We thank our associates for their continued hard work and commitment, and we appreciate the ongoing support of our vendors, suppliers and business partners.”

Express, which was founded in 1980 by Les Wexner’s Limited Brands, has endured a difficult few years. Its sales have plummeted while debt and costly leases dragged down its business.

News: Apparel retailer Express files for US bankruptcy protection, to close over 100 stores

99 Cents Only files for Chapter 11

BY Fraser Tennant

Citing inflationary pressures that made its business model unsustainable, budget retailer 99 Cents Only has filed for Chapter 11 bankruptcy.

99 Cents Only Stores, together with its financial and legal advisers, engaged in an extensive analysis of all available and credible alternatives to identify a solution that would allow the business to continue.

Following months of actively pursuing these alternatives, the company ultimately determined that an orderly wind-down was necessary and the best way to maximise the value of 99 Cents Only Stores’ real estate and other assets.

To that end, the company has secured $60.8m in senior secured super priority debtor in possession financing consisting of $35.5m in new money to be provided by an entity affiliated with certain of the company's existing stakeholders, subject to court approval.

To date, all 99 Cents Only Stores remain open, and the company has commenced going out of business sales at all 371 store locations, offering customers significantly reduced prices on a wide range of products. The company has also filed customary motions with the bankruptcy court to support its operations through the wind-down process, including payment of employee wages.

“This was an extremely difficult decision and is not the outcome we expected or hoped to achieve,” said Mike Simoncic, interim chief executive of 99 Cents Only Stores. “Unfortunately, the last several years have presented significant and lasting challenges in the retail environment, including the unprecedented impact of the pandemic, shifting consumer demand, rising levels of shrink, persistent inflationary pressures and other macroeconomic headwinds, all of which have greatly hindered the company’s ability to operate.”

To help facilitate the wind-down, the company has appointed Chris Wells, managing director at Alvarez & Marsal, as chief restructuring officer, with Mr Simoncic stepping down.

Founded in 1982, 99 Cents Only Stores LLC currently operates nearly 371 stores located in California, Texas, Arizona and Nevada. It offers a broad assortment of name brand and other attractively priced merchandise as well as compelling seasonal product offerings.

Mr Simonic concluded: “We deeply appreciate the dedicated employees, customers, partners and communities who have collectively supported 99 Cents Only Stores for decades.”

News: Retailer 99 Cents Only files for bankruptcy, plans to shut down

Enviva files for Chapter 11 to implement RSAs

BY Fraser Tennant

Aiming to reduce its debt by approximately $1bn, wood-based biomass producer Enviva Inc. has filed for Chapter 11 bankruptcy so that it may implement two restructuring support agreements (RSAs) with its creditors.

The RSAs have broad support across the company’s capital structure and are designed to improve profitability, strengthen liquidity and better position the business for long-term success as the world’s largest producer of industrial wood pellets.

The restructuring is targeted to be completed during the fourth quarter of 2024.

Enviva has also secured commitments for $500m in debtor-in-possession (DIP) financing and other financing accommodations, a portion of which will be allocated by the company to eligible stockholders in accordance with a syndication process that is subject to court approval.

The DIP facility is expected to provide, subject to court approval, sufficient liquidity to support continued operations across Enviva’s business throughout the restructuring process.

“These agreements represent a significant milestone in the ongoing process to transform our business, as we focus on improving profitability, reducing costs, enhancing asset productivity and optimising our capital structure,” said Glenn Nunziata, interim chief executive and chief financial officer at Enviva. “We look forward to emerging from this process as a stronger company with a solid financial foundation and better positioned to be a leader in the future growth of the wood-based biomass industry.”

The world’s largest producer of industrial wood pellets, Enviva owns and operates 10 plants with annual production of approximately 5 million metric tonnes in Virginia, North Carolina, South Carolina, Georgia, Florida and Mississippi, and is constructing its 11th plant in Epes, Alabama.

The company sells most of its wood pellets to customers located primarily in the UK, the European Union and Japan, helping to accelerate the energy transition away from conventional energy sources and reduce greenhouse gas emissions on a lifecycle basis in hard to abate sectors such as steel, cement, lime, chemicals and aviation.

Enviva expects to continue to pay suppliers in the ordinary course for authorised goods received and services provided after the Chapter 11 filing.

Mr Nunziata concluded: “We appreciate the support of our lenders, vendors and customers, and the tremendous efforts of our entire team as we continue to execute our transformation plan.”

News: Enviva announces Restructuring Agreements amid Chapter 11 proceedings

Invitae files for Chapter 11 protection

BY Fraser Tennant 

Following rumours of imminent bankruptcy, plummeting stock prices and its trading suspension and delisting on the New York Stock Exchange, medical genetics company Invitae has filed for Chapter 11 bankruptcy protection.

According to court documents, the company is approximately $1.5bn in debt and has estimated total assets of between $500m and $1bn. Invitae began taking steps to reduce its debt in 2022 by terminating 1200 employees, downsizing office space and testing labs, and selling off unprofitable, non-core businesses.

The company intends to transition into Chapter 11 without disrupting business operations, and is committed to serving its customers and patients and meeting its commitments to employees and vendors. It has also stated it is seeking court approval to use the cash it currently has on hand to fund the case.

“We have been working diligently over the past 18 months to improve our cash position by realigning our portfolio and focusing on our most impactful business lines,” said Ken Knight, president and chief executive of Invitae. “These strategic initiatives have accelerated our path to positive cash flow in order to realise our potential as an industry-leading genetics platform.

“However, we still need to address the company’s debt position through these Chapter 11 proceedings,” he continued. “I want to thank our incredibly talented and hard-working employees for their continued focus on our patients and customers.”

Trusted by millions of patients and their providers to deliver timely genetic information using digital technology, Invitae provides accurate and actionable answers to strengthen medical decision making for individuals and their families.

The company’s genetics experts apply a rigorous approach to data and research, serving as the foundation of their mission to bring comprehensive genetic information into mainstream medicine to improve healthcare for billions of people.

As it moves through the Chapter 11 process, Invitae has reiterated its intention to remain steadfast in its commitment to deliver innovative solutions that empower individuals to unlock the value of genomic insights to improve their health.

News: Invitae gets court approval for five-month bankruptcy sale