InSight Health Services Holdings has commenced a prepackaged reorganization under chapter 11 of the U.S. Bankruptcy Code in New York to deleverage the company’s balance sheet and eliminate all of its outstanding senior secured floating rate notes due 2011 constituting more than $290 million of debt.
On Dec. 2, InSight Imaging reached an agreement in principle with holders of a significant majority in aggregate principal amount of its notes regarding a restructuring of the notes. As of the filing of its prepackaged chapter 11 plan, the Lake Forest, Calif.-based company received votes accepting the plan from holders in excess of 70 percent in amount of the notes. In addition, an approximately $15 million post-petition financing facility provided by its existing revolving lender, Bank of America, will provide the company with additional liquidity during its chapter 11 cases.
After discussions with noteholders and additional discussions with Bank of America regarding the post-petition financing package, InSight and the noteholders agreed to the terms of a chapter 11 plan that will convert the notes into 100 percent of the equity in the reorganized company. The company’s existing shareholders will receive warrants for new common stock. The plan, which still requires court approval, also provides for full recovery for the allowed claims of the company’s general unsecured creditors. The voting deadline for the prepackaged plan is Dec. 27.
InSight’s management team and employees will continue to operate the business in the ordinary course throughout the restructuring, the company said. Together with cash flows from operations, the $15 million in committed post-petition financing provides stability and liquidity to fund daily operations without interruption, including payments to vendors and to meet all customer and employee obligations.
A copy of the plan and the disclosure statement in support of the plan can be viewed here.