Hospital Partners bankruptcy case to be converted to Chapter 7 Friday

By Caroline Salls

Pittsburgh, Nov. 20 - Hospital Partners of America, Inc.'s Chapter 11 bankruptcy case will be converted to Chapter 7, effective at 3 p.m. ET on Friday, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company asked the court to convert the case in light of the fact that its debtor-in-possession financing is set to expire on Nov. 21.

Hospital Partners said it anticipates that upon the DIP loan's expiration, the company will have borrowed the full $2.6 million available under the loan.

The company will be unable to repay the facility upon maturity or fund its Chapter 11 case going forward, according to the motion.

Specifically, Hospital Partners said it does not have the ability to pay the administrative expenses that would continue to accrue if it remains in Chapter 11 bankruptcy.

Hospital Partners said DIP lender New Enterprise Associates 10, LP has told the company it does not plan to extend the loan past Nov. 21.

As a result, Hospital Partners said any cash remaining in the estates on that date would constitute cash collateral of the DIP lender.

Hospital Partners of America, a Charlotte, N.C.-based privately held company that develops and operates hospitals, filed for bankruptcy on Sept. 24. Its Chapter 11 case number is 08-12180.

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