HIMA San Pablo: DIP Financing Approved
HIMA San Pablo: DIP Financing Approved
Yesterday, Judge Lamoutte authorized HIMA San Pablo to obtain senior secured postpetition financing on a superpriority basis in the aggregate principal amount of $7,000,000, pursuant to the terms and conditions of a “Debtor-in-Possession Credit Agreement.” The renewed petition followed a confidential mediation process led by U.S. Bankruptcy Judge María de los Ángeles González between the debtors, Island Healthcare, Alter Domus, CRIM, and AAFAF.
As a result of the mediation, the parties agreed to the following changes to the terms of the DIP financing:
- the DIP facility was increased from $6 to $7 million;
- the roll-up of prepetition debt was decreased to 4:1 from 5:1;
- CRIM’s prepetition statutory lien will not be primed solely in respect to the principal amount of the applicable CRIM obligations in the aggregate amount of $9,544,830.33,
- the UCC will receive an increased budget to investigate potential avoidance actions as well as more time to file challenges to liens;
- among other changes.
The debtors, CRIM, Island Healthcare, and Alter Domus also filed a stipulation for the treatment of CRIM’s secured claims, under which CRIM withdrew its objection to the debtors’ DIP financing as well as the sale of the debtors’ assets and related procedures. AAFAF also withdrew its limited objection to the proposed terms for the sale of the debtors’ assets.
The debtors also modified the proposed terms of the sale of the Fajardo hospital to address the objections raised by the United States, acting on behalf of the U.S. Department of Health and Human Services. As a result of the agreed changes, the Medicare provider agreements for the Fajardo hospital will not be transferred to the buyer.
During Thursday’s hearing, counsel for the buyer—former bankruptcy judge Brian K. Tester—noted that his client will seek a new Medicare provider agreement. However, he also clarified that the services to the Medicare population will remain uninterrupted as the buyer will assume the risk of any nonpayment by HHS while the buyer seeks the new provider agreement.
All in all, good news.