Vanguard Healthcare seeks OK of $2 million loan to fund plan payments

By Caroline Salls

Pittsburgh, July 7 – Vanguard Healthcare, LLC requested court approval to obtain a $2 million unsecured post-bankruptcy loan “to be funded on or before the effective date of the debtors’ joint plan of reorganization,” according to a motion filed Friday with the U.S. Bankruptcy Court for the Middle District of Tennessee.

Vanguard said it will require additional capital to make the required payments under its first amended plan, which is currently pending court approval.

The company said it filed a motion in March for a loan on the same terms from Hisashi Yokoi. The court limited that loan to $500,000, but Vanguard did not close the loan because its cash flow from 2017 operations improved in April and thereafter.

Vanguard now requests authority, conditioned on confirmation of the plan, to borrow $2 million from Yokoi to provide working capital to fund the plan.

According to the motion, the company will issue a convertible promissory note in the amount of the loan.

Interest will accrue at a fixed rate of 7%, and the loan will mature in five years from closing.

At maturity, Yokoi will have the option to convert the loan to a 10% equity interest in Vanguard, or the company will repay the principal and interest due on the loan.

A hearing is scheduled for Aug. 8.

Vanguard is a Brentwood, Tenn., long-term care provider. The company filed bankruptcy on May 6, 2016 under Chapter 11 case number 16-03296.

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