On January 11, 2025, a Sidley team represented California-based hospital operator Prospect Medical Holdings Inc. (Prospect) and several subsidiaries in its Chapter 11 filing in the United States Bankruptcy Court for the Northern District of Texas.
Prospect owns and/or operates 16 acute and behavioral hospitals in California, Pennsylvania, Rhode Island, and Connecticut, which provide a comprehensive range of services tailored to their specific communities, including partnerships with other area hospitals, physicians, and health plans. As of the filing of the bankruptcy petitions, Prospect had approximately US$2.3 billion in total funded debt obligations, of which approximately US$1.1 billion sat at entities that had sought Chapter 11 protection.
The Sidley team successfully negotiated, as part of the Chapter 11 filing, debtor-possession-financing in the amount of US$100 million from JMB Capital Partners Lending, LLC. The Sidley team additionally successfully negotiated a secured postpetition revolving credit facility, provided by eCapital Healthcare Corp., in an amount of up to US$90 million. At Prospect’s “first day” hearing, the court granted all of the requested relief, including the approval of the JMB financing facility on a contested “priming” basis. Following this extraordinary relief, Prospect intends to utilize this funding and the bankruptcy case to sustain the critical day-to-day operations of its facilities, maintain quality patient care, implement the anticipated sales of its hospital assets, and bring the Chapter 11 cases to a value-maximizing conclusion for all stakeholders.
The team includes Tom Califano, Bill Curtin, Rakhee Patel, Patrick Venter, Anne Wallice, Claire Terry, Parker G. Embry, Veronica Courtney, Sean Nuernberger, Siddhanth Goyal, Jake Landreth, Amanda Rahie, Daniela Rakowski, Alexa Schneider, and law clerks Charlie B. Brownstein, William H. Calix, Chang Liu, Ben Luo, Vivian Li, Zoe Stern, and Dylan C. Yan (Restructuring); Kelly Lazaroff, Ethan Konschuh, and Madeline Moore (Global Finance); Jim Ducayet and Walter Carlson (Securities and Shareholder Litigation); Andrew Watkins (Commercial Litigation and Disputes); Mary Niehaus and Steven Szymanski (Employee Benefits and Executive Compensation); Joshua Samek and Brandon Borino (M&A); Allison C. Ivey Toth (Labor, Employment and Immigration); project assistant Ruby J. Brann (Investment Funds); Kate Roberts (Labor, Employment and Immigration); Mark L. Kaufmann (Technology and Life Sciences Transactions); and Jon Zucker and George Maliha (Healthcare).
