InSight Health exits bankruptcy; noteholders swap debt for equity

By Caroline Salls

Pittsburgh, March 23 - InSight Health Services Holding Corp. emerged from Chapter 11 bankruptcy when its plan of reorganization took effect on Wednesday, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

The plan was confirmed on Jan. 28.

As previously reported, under InSight's plan:

• The company's noteholders have agreed to convert their notes into 100% of the equity in the reorganized company;

• Existing shareholders will receive three-year warrants to purchase 2% of the company's new common stock;

• To the extent not refinanced by the company's debtor-in-possession financing, holders of revolving facility claims will be paid in full in cash from exit financing proceeds; and

• Holders of general unsecured claims will be paid in full in cash.

According to court documents, InSight Health was negotiating the terms of a three-year, $15 million exit facility, which could be increased in $2.5 million increments to $20 million.

Interest on the facility was scheduled to be Libor plus 375 basis points with a 1.50% Libor floor.

InSight, a Lake Forest, Calif., provider of diagnostic imaging services, filed for bankruptcy on Dec. 10 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 10-16564.

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