M*Modal Chapter 11 plan confirmed, looks to emerge within three weeks

By Caroline Salls

Pittsburgh, July 15 – M*Modal Inc. said it expects to emerge from Chapter 11 within three weeks after the U.S. Bankruptcy Court for the Southern District of New York confirmed its plan of reorganization on Tuesday.

“We are pleased to have reached this important final milestone and look forward to emerging from the financial restructuring process which will dramatically reduce our debt, strengthen our balance sheet and provide significant financial flexibility,” chief executive officer Duncan James said in a company news release.

“With renewed financial strength, we will continue our focus on delivering innovative solutions to our health care customers and growing market share.”

M*Modal said the plan reflects the terms of a previously announced agreement with its controlling bondholders and lenders on the terms of a financial restructuring. The company said the financial restructuring will reduce its debt by more than 55%.

Treatment of creditors under the plan will include the following:

• Administrative claims, priority tax claims, priority claims, debtor-in-possession financing claims and convenience claims will be paid in full in cash;

• Holders of first-lien credit agreement claims will receive a new term loan, 93% of the stock of reorganized MModal Holdings, Inc. or one of its affiliate debtors, before dilution for stock warrants to be issued in connection with the plan and a management stock option plan, and $8.24 million in cash;

• Holders of general unsecured claims will receive 7% of reorganized holdings equity interests before dilution, warrants and $860,196 in cash, provided, however, that holders of these claims, other than noteholders, can elect to receive cash equal to 3.4% of the claim;

• Holders of subordinated claims will receive no distribution except to the extent the court elects not to subordinate them, in which case they will be treated as either general unsecured claims or convenience claims, depending on their size;

• Existing equity will be cancelled with no distribution for equityholders;

• Intercompany equity interests will be reinstated; and

• Intercompany claims will either be cancelled or reinstated, at the debtors’ option.

M*Modal, a Franklin, Tenn.-based provider of clinical documentation services, filed for bankruptcy March 20. The Chapter 11 case number is 14-10701.

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