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Liberty Medical Supply receives interim OK for cash collateral use
By Jim Witters
Wilmington, Del., Feb. 20 - Liberty Medical Supply, Inc. received interim approval for the use of its secured lender's cash collateral and got an OK for other routine first-day motions during a Feb. 20 hearing in the U.S. Bankruptcy Court for the District of Delaware.
Debtors attorney Nancy A. Mitchell said the 22-year-old mail-order company, which provides medical supplies to diabetics, got caught in a financial bind that involves
• Medco Health Solutions, Inc. failing to perform its obligations;
• The Center for Medicare and Medicaid Services insisting on recouping substantial monthly amounts in connection with disputed post-pay audits;
• A pending civil lawsuit; and
• Competitor and secured lender Alere, Inc. attempting to exercise a contractual option to acquire substantial company assets - including some clients - in a way that Liberty Medical claims is inconsistent with the governing agreement.
Alere financed the management buyout of the company in December and holds a $40 million secured loan, Mitchell said.
The new owners hope the bankruptcy process will provide them the time to implement an operational restructuring they envisioned when they initiated the purchase, she said.
The company recorded $620 million in revenue during 2012 and is St. Lucie County, Florida's largest employer, with 1,600 workers, Mitchell told the court.
A hearing for final approval of the use of cash collateral is scheduled for 2 p.m. ET on March 14.
Liberty Medical, a Port St. Lucie, Fla.-based health-care products home delivery provider, filed for bankruptcy on Feb. 15. The Chapter 11 case number is 13-10262.
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