Pipeline Health committee supports plan after modifications

By Sarah Lizee

Olympia, Wash., Jan. 12 – Pipeline Health System, LLC’s official committee of unsecured creditors said it supports the company’s Chapter 11 plan, following some modifications, according to a statement filed Wednesday with the U.S. Bankruptcy Court for the Southern District of Texas.

The plan has limited value to distribute to creditors and requires concessions from all parties, including the debtor’s lenders and unsecured creditors, the committee said.

“In light of this, and based on imperfect information, the committee has reached an agreement that will allow it to support the plan,” the group said.

Following negotiations between the debtor, committee and lenders, changes were made to the plan that focus on cure claims, alleged preference claims and the schedule of retained causes of action.

The plan is predicated on the assumption that non-debtor contract counterparties will accept less than 100% payment of cure claims on the effective date. While creditors still have to agree to discount their cure claims in order for the plan to satisfy the bankruptcy code, the debtors and lenders agreed to increase the amount allocated in their post-emergence business plan to satisfy cure claims, which increases recoveries of general unsecured creditors/non-debtor contract counterparties.

The debtors and lenders have agreed to waive all but a short list of claims under section 547 of the bankruptcy code. Any retained causes of action relating to the alleged preferences will be specifically identified in the schedule of retained causes action and will not include any party on the assumed executory contracts and unexpired leases schedule.

The debtors and lenders also agreed to revise the schedule of retained causes of action in order to specifically describe those causes of action the debtors seek to retain and to remove ambiguous catch-all provisions.

“These changes provide the debtors’ unsecured creditors with real benefits where the originally proposed plan offered none,” the committee said in its statement.

The confirmation hearing is scheduled for Jan. 13.

As previously reported, under the pre-packaged Chapter 11 plan, term loan lenders will either receive reorganized equity or the debtors’ assets through a credit bid.

Holders of other secured claims will receive payment in full in cash, reinstatement of their claims, or other treatment leaving the claims unimpaired.

Holders of other priority claims will receive payment in full in cash or other treatment leaving the claims unimpaired.

If an equitization restructuring occurs, holders of asset-based lending facility claims will receive their pro rata share of an exit facility. If an asset sale restructuring occurs, they’ll receive either a pro rata share of the exit facility or a pro rata share of the debtor’s remaining cash after payment in full of senior claims. There will be at least $20,602,335 in total.

Term loan claims will be allowed in an amount of no less than $257,655,259.08. The class is impaired. If the equitization restructuring occurs, lenders will receive a pro rata share of the equity pool. If there is an asset sale, term loan lenders would receive a pro rata share of the credit bid distribution and a pro rata share of the debtors’ remaining cash.

If the equitization restructuring occurs, general unsecured claims will be discharged and released with no distribution. If an asset sale restructuring occurs and there are any excess sale proceeds, holders will receive a pro rata share of those proceeds.

Holders of intercompany claims will receive no distribution.

Intercompany interests will be reinstated, distributed, contributed, set off, settled, canceled and released, or otherwise addressed.

All existing parent interests will be canceled without any distribution.

Holders of section 510(b) claims will receive no distributions.

Pipeline Health System is an El Segundo, Calif.-based community-focused health care network. It filed bankruptcy on Oct. 2 under Chapter 11 case number 22-90291.

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