Astria Health Chapter 11 plan of reorganization effective Jan. 15

By Sarah Lizee

Olympia, Wash., Jan. 19 – Astria Health’s second amended Chapter 11 plan of reorganization went into effect on Friday, according to a notice filed with the U.S. Bankruptcy Court for the Eastern District of Washington.

The plan was confirmed on Dec. 23, as previously reported.

Under the plan, AH NP 2, a non-profit corporation and currently a wholly owned non-debtor subsidiary of Astria, will become the sole member of Astria, and Astria will change from a no-member nonprofit corporation to a single-member non-profit corporation.

A newly created non-debtor entity, AH System, a freestanding non-profit corporation, will assume the non-discharged debt of the debtors in exchange for AH NP 2’s transfer of its sole membership interest in Astria to AH System.

MultiCare Health System has offered to provide Astria with a $75 million exit loan, to be used to pay off the Lapis party claims in full. However, if the MultiCare loan is not funded by Jan. 15, the Lapis parties have agreed to reinstatement of the senior secured bond debt claims, with payments made by the reorganized debtors over time.

AH System will issue debt instruments to satisfy the DIP claims and senior secured credit agreement claims in full.

A GUC distribution trust will be created to pursue all avoidance actions, reconcile general unsecured claims, receive certain assets from the debtors and/or reorganized debtors – including the initial GUC distribution amount of $5 million and additional funds totaling not less than $2.3 million – and make pro rata distributions to holders of allowed general unsecured claims.

A liquidation trust will be created from assets of the debtors not necessary for the operation of their core health care businesses or constituting GUC distribution trust assets under the plan. In the event any assets in the liquidation trust are liquidated, the proceeds will be used to fund AH System’s operating cash account up to an amount equal to the lesser of $10 million or 30 days cash on hand and then to pay debt issued by AH System.

Holders of allowed claims will receive a distribution of cash or proceeds from the applicable plan trust.

All intercompany claims will be expunged and eliminated through the limited consolidation of the debtors for purposes of treatment of claims and distributions under the plan.

The debtors will proceed with the closure plan of SHC Medical Center – Yakima, doing business as Astria Regional Medical Center in Yakima, Wash., and dissolve the related non-operating debtors.

All other administrative claims, professional fee claims, priority tax claims and priority unsecured claims will be paid in full in cash.

Holders of other secured claims will be paid in full in cash, have their claims reinstated, or receive the collateral securing their claims.

Holders of convenience class claims will be paid 20% of the allowed amount of their claims up to a maximum of $1,000.

Astria Health is a Yakima, Wash., health care facility operator. The company filed bankruptcy on May 6, 2019 under Chapter 11 case number 19-01189.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.