Randolph Hospital disclosure statement hearing continued to July 1

By Sarah Lizee

Olympia, Wash., May 20 – Randolph Hospital, Inc.’s, which does business as Randolph Health, hearing on approval of the disclosure statement for its Chapter 11 plan of liquidation has been continued to July 1 from June 4, according to an order filed Thursday with the U.S. Bankruptcy Court for the Middle District of North Carolina.

Objections are due by June 24.

In its motion seeking the continuance, the company said that it needs additional time to revise its plan to account for its amended sale transaction with American Healthcare Systems, LLC.

The North Carolina local government commission completed its review of Randolph County’s application for funding under a stabilization program, and the commission said it was unlikely to approve the entire $20 million grant. However, the county did get approval of $12 million in funding, payable over four years under a forgivable loan to American Healthcare Systems.

Based on this outcome, the debtors and official committee of unsecured creditors negotiated an amended sale transaction where the stabilization program contingency was removed in exchange for a lower purchase price of $10.2 million.

The company said that in order to gain approval of the amended transaction and give notice to interested parties of the right to overbid, the debtors filed a motion for approval of the amended sale transaction, which is set to be heard on June 4. The debtors said they need more time to revise the plan and disclosure statement to account for the outcome of the hearing.

Plan terms

The plan distributes proceeds of the sale of Randolph’s assets to American Healthcare Systems, provides for the liquidation of the remaining assets through a liquidation trust, appoints an advisory committee to oversee the administration of the liquidation trust and be a representative of the debtors and the estates with respect to the D&O claims and other tort claims, and appoints a surviving officer of the debtors to administer the restricted assets and wind down the debtors.

Secured tax claims and priority non-tax claims will be paid in full.

Holders of secured term loan claims will receive the proceeds from the sale of the real property collateral securing the secured term loan claim in an amount equal to the value of the term lender’s interest in the real property collateral and the net proceeds of accounts from patient services rendered prior to the closing of the asset sale.

Holders of other secured claims will receive the proceeds from the asset sale in an amount equal to their interests in the collateral securing their claims, or the debtors will surrender the collateral securing the claims to the holders.

Holders of general unsecured claims will receive a pro rata share of net trust assets.

Holders of medical malpractice claims will be granted relief from the automatic stay and any stay or injunction provided for under the plan to pursue payment of their medical malpractice claims from applicable insurance policies. To the extent the claims are allowed, recovery will be limited to any available proceeds of the insurance policies. Holders will not receive any cash distribution from the liquidation trust or otherwise on account of their claims.

Randolph is an Asheboro, N.C.-based health care company. The company filed bankruptcy on March 6, 2020 under Chapter 11 case number 20-10247.

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