Saint Vincent gets court OK for plan of reorganization

By Reshmi Basu

New York, July 27 - Saint Vincent Medical Centers obtained court approval for its plan of reorganization on Friday from the U.S. Bankruptcy Court for the Southern District of New York, according to a company news release.

The plan is expected to become effective by Labor Day, Sept. 3.

"The plan reflects the culmination of more than two years of effort to create a strong, financially viable health care institution, focused on a bright future with many opportunities.," sad Martin McGahan, chief restructuring officer, in the release.

"We appreciate the support we received throughout the chapter 11 from so many parties, and we are very pleased that our pre-petition unsecured creditors and pre-petition medical malpractice creditors voted overwhelming in support of the plan," he added.

According to the release, Saint Vincent obtained more exit financing from GE Healthcare Financial Services, which had been its debtor-in-possession lender. GE Healthcare will increase the credit facility to $320 million from $300 million

As earlier reported, the facility's maturity will be seven years from the closing date.

Interest on the term loan will be Libor plus 300 basis points and interest on the revolver will be Libor plus 200 bps.

Proceeds will be used to meet plan obligations and provide for the working capital and general corporate purposes of the reorganized company, including the issuance of letters of credit.

Creditor treatment

As previously reported, treatment of creditors under the plan will include:

• Holders of administrative expense, priority non-tax and DIP claims will recover 100% in cash;

• Holders of priority tax claims will recover 100% in cash over a maximum of six years plus 7% interest;

• Holders of other secured claims will recover 100% in either cash or return of the collateral securing the claim at the company's option;

• Holders of the Aptium secured claim will recover 100% of the anticipated compromise amount from a separate agreement;

• Holders of the Commerce secured claim will recover 100% through reinstatement of their claim;

• Holders of the RCG and Sun Life secured claims will recover 100% through either reinstatement of their claim or in cash;

• Holders of general unsecured claims against Saint Vincent will recover 100% plus interest through a cash distribution, which will yield at least an 80% distribution; a share of the secured obligation, which will yield a cumulative 85% distribution plus interest up to the fifth anniversary date; a share of the unsecured obligation, which will yield a cumulative 93% distribution plus interest up to the seventh anniversary of the effective date; and a share of the GUC litigation trust interest, which could yield a cumulative 100% distribution plus interest;

• Holders of the medical malpractice BQ, MW and SI claims will recover 100% in cash plus interest to the extent that there is distributable cash in the trust, plus payments each time there is a cash payment to the trust;

• Holders of intercompany claims will recover 100% in cash after all general unsecured, medical malpractice and Pension Benefit Guaranty Corp. claims have been paid in full;

• Holders of DASNY subordinated claims will recover 41% in their share of $2.87 million, and, after all general unsecured, medical malpractice and PBGC claims have been paid in full, DASNY subordinated claimants will receive their share of $3.9 million; and

• Holders of equity interests in the other debtors will receive the remaining assets of the applicable debtor.

The New York metropolitan area health care system filed for bankruptcy on July 5, 2005. Its Chapter 11 case number is 05-14945.

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