Adeptus Health equity committee seeks trustee, ready to propose plan

By Caroline Salls

Pittsburgh, July 28 – Adeptus Health Inc.’s official committee of equity security holders asked the U.S. Bankruptcy Court for the Northern District of Texas to order appointment of a Chapter 11 trustee or examiner for the company’s bankruptcy case, according to a motion filed Thursday.

“Stated simply, the equity committee firmly believes that the appointment of a Chapter 11 trustee to act as an independent fiduciary for AHI’s stakeholders and prevent AHI’s currently conflicted board of directors and management from further squandering AHI’s assets for the primary benefit of Deerfield is both necessary and proper and fully supported by the evidence,” the motion said.

The committee said the Adeptus Chapter 11 cases represent a “loan-to-own” strategy employed by Deerfield.

Specifically, the committee said Deerfield “scooped up the debtors’ secured debt for pennies on the dollar,” imposed restrictive milestones through a debtor-in-possession facility intended to stifle a competitive process, is requiring Adeptus to assume agreements restructured by Deerfield and is requiring the company to reject other agreements “where rejection may not be in the best interests of the debtors’ estates.”

“The sum total of these actions will result in Deerfield realizing a substantial ‘pop’ in the debtors’ value post-consummation, while AHI and the other debtors are saddled with the cost,” the motion said.

According to the motion, the equity committee is prepared to propose a plan solely for the Adeptus debtor that it said maximizes value for the estate and affords substantial cash recoveries to trade creditors.

Under the committee’s proposed term sheet, if the company’s official committee of unsecured creditors consents to the trustee appointment, litigation trust funders will offer to acquire allowed eligible subsidiary general unsecured claims at 50% of the face amount of those claims up to a maximum of $25 million.

Based in Lewisville, Texas, Adeptus maintains a network of freestanding emergency rooms and partnerships with health care providers. The company filed bankruptcy on April 19 under Chapter 11 case number 17-31432.

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