Alliance Medical seeks OK to sell assets, obtain $5 million DIP loan

By Caroline Salls

Pittsburgh, Sept. 21 – Alliance Medical Holdings, LLC requested court approval of the bid procedures for the proposed sale of substantially all of its assets and sought approval to obtain debtor-in-possession financing, according to a motion filed with the U.S. Bankruptcy Court for the Southern District of Texas.

CFS 19111, LLC is the DIP lender and the stalking horse bidder.

If no higher or better bids are received, CFS has agreed to buy the company’s assets in exchange for a cash payment of $12.5 million and a credit bid of a $5 million DIP loan for a total of $17.5 million in consideration.

Alliance said sufficient cash will remain in the estate for the confirmation of a Chapter 11 liquidating plan.

Competing bids are due by 5 p.m. ET on Oct. 13 and must exceed the stalking horse bid by at least $1.08 million.

If CFS is not the winning bidder for the assets, it will receive a break-up fee equal to 3% of the purchase price, as well as reimbursement of up to $250,000 of its sale-related fees.

An auction will be held on Oct. 16, if necessary.

“The debtors do not believe stand-alone restructuring is currently possible, given liquidity restrictions, the amount of secured indebtedness and other operational issues,” Alliance said in the motion.

The unused portion of the DIP loan will accrue interest at a rate of 14˝%, and the committed but undrawn principal amount from the date of the DIP financing order to the plan effective date will accrue interest at 1˝%.

The loan will mature on the earliest of 45 days after entry of the DIP financing order, the occurrence of a termination event, the conversion or dismissal of Alliance’s bankruptcy cases and the sale closing date.

The bid procedures and DIP financing hearings are scheduled for Oct. 4.

Alliance is a South Jordan, Utah-based pharmacy company. The company filed bankruptcy on April 7 under Chapter 11 case number 17-32186.

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