Milbank has successfully represented the Ad Hoc Group of Term Lenders in the chapter 11 cases of Quorum Health Corporation and its affiliated debtors. Quorum owns, leases, or operates 22 hospitals in rural and mid-size communities across 13 US states.
On April 7, 2020, after entering into a restructuring support agreement with a majority of its first lien lenders (including the Ad Hoc Group of Term Lenders) and noteholders on a pre-packaged chapter 11 plan of reorganization (the “Plan”), Quorum filed voluntary petitions for chapter 11 relief in the US Bankruptcy Court for the District of Delaware. The Company filed for bankruptcy protection to address liquidity needs and right-size its capital structure while continuing to care for patients and keep its hospitals operating amid the COVID-19 pandemic.
Quorum obtained confirmation of its chapter 11 plan on June 29, 2020. Under the confirmed Plan, Quorum cut its roughly $1.3 billion in debt by about $500 million, including a $50 million paydown for its term lenders and the equitization of Quorum’s 11.625% Senior Notes due 2023. Quorum also received a $200 million equity commitment from certain holders of the Senior Notes that was funded upon completion of the cases and used to pay various costs and reduce debt. Further, Quorum emerged from chapter 11 with over $700 million in take-back exit facility loans funded in part by the Ad Hoc Group of Term Lenders. Quorum emerged from bankruptcy on July 7, 2020.
The matter is significant given the challenges of restructuring a rural hospital company amid the COVID-19 pandemic, including obtaining a refinancing and substantial cash pay down of Milbank’s clients’ existing term loan. The Milbank team was able to obtain unanimous consent for the Plan from the First Lien Loan Claims and also played a significant role in obtaining confirmation of the Plan over staunch opposition from the company’s largest equity holder, including a valuation fight and testimony from a dozen witnesses.
The Milbank team was led by Financial Restructuring partners Dennis Dunne and Tyson Lomazow and included partners Albert Pisa (Alternative Investments), and Alexander Lees (Litigation and Financial Restructuring), special counsel Maya Grant (Alternative Investments), and associates Kim Goldberg (Litigation), and Alex Miller (Financial Restructuring), among other Milbank attorneys.
