DVI files for Chapter 11, holds discussions on possible sale of company

By Carlise Newman

Chicago, Aug. 25 - DVI Inc. has filed voluntary petitions for relief under Chapter 11 in the United States Bankruptcy Court for the District of Delaware, and listed $1.866 billion in assets and $1.618 billion in liabilities. DVI also said it is currently in discussions with several parties regarding a potential sale.

DVI's largest unsecured creditors include U.S. Bank Trust NA, the trustee for its 9 7/8% senior notes due 2004 with $155 million in claims, Canadian Imperial Bank Commerce Trust Co., with $12.75 million in claims; Toshiba America Medical Systems Inc., with $7.9 million in claims; Phillips Medical Systems Inc., with $7.9 million in claims; ING Capital Advisors LLC, with $4 million in claims; Visx Inc., with $3.5 million in claims; GE Medical Systems, with $2.1 million in claims; Hitachi Medical Systems, with $1.6 million in claims; McKesson, with $1.5 million in claims; Accuray Inc., with $1.5 million in claims; and Touchstone Medical Systems America Inc. with $1.3 million in claims.

DVI said it filed for reorganization as a result of an unsuccessful diversification strategy, unsuccessful integration of business units, decreased profitability, concerns regarding near-term liquidity requirements and the recent discovery of possible accounting irregularities. The company said a committee of independent directors has been formed to investigate the possible accounting irregularities.

The company has retained Latham & Watkins as legal counsel and has appointed AlixPartners as crisis managers.

In conjunction with the filing, Michael O'Hanlon, DVI's CEO has resigned and Mark E. Toney, a principal at AlixPartners, was named CEO.

The Jamison, Pa.-based medical billing company said it is continuing to work toward obtaining debtor-in-possession financing, as well as generate cash from within the company to sustain operations while trying to sell its assets.

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