Reuters reports MModal, a medical transcription company, has filed for bankruptcy protection today in efforts to reduce its debt. MModal, which is owned by J.P. Morgan Chase & Co’s private-equity arm, has listed their assets and liabilities in the $500 million to $1 billion range. In 2012, this company was taken private by One Equity Partners in a $1.1 billion all-cash deal.
MModal bankruptcy to restructure balance sheet
According to Duncan James, MModal’s chief executive:
“The acquisition was financed with a capital structure aligned with a specific set of assumptions that are no longer relevant. As a result, there is a need to restructure the company’s balance sheet to better align with changing market dynamics and refinements to our strategy.”
MModal has met and held discussions with their bondholders as well as their lenders and believe they will be able to come to mutually agreeable terms for their bankruptcy repayment plan. MModal also believes they will continue to be able to generate funds from their business to continue operations throughout the bankruptcy period. Cash on hand will also be used to facilitate business for MModal.
Detroit asks for appeals cases to be consolidated
In other bankruptcy news, Detroit has requested that the federal appeals court, which is scheduled to review the validity of Detroit’s Chapter 9 municipal bankruptcy case, consolidate seven cases. The motion, which was submitted to the Sixth Circuit U.S. Court of Appeals, requested that all the parties including the city’s two pension funds, labor unions and retiree groups, combine their cases and file one principal brief.
Combining the cases, according to the motion, makes legal sense because each of the claimants is basically asking the court for the same decision: for the court to decide Detroit is not legally allowed to file bankruptcy. They also have raised largely the same legal challenges to that determination. Reports indicate, however, that the claimants are not sure if consolidation is in their best interest.
What if the court decides against consolidation?
If the court decides the cases should not be consolidated, Detroit has ask the court to extend the time they will be allowed to respond to the appeals from May 27 to June 17. Some of the parties, however, such as the general and police and fire pension funds, have requested another motion asking the court to speed up the appeals process.
Meanwhile, the city of Detroit submitted their debt adjustment plan last week to the United States bankruptcy court. Many of the creditors have worked with Detroit, but others, such as the general and police and fire pension funds, have claimed that if the plan is approved it could “threaten the accrued pension benefits upon which more than 32,000 active and retired city workers and other beneficiaries rely for their primary – and in many instances only – source of income in retirement.”
What will happen if the bankruptcy plan is approved by the court? It may lead to a dismissal of the appeals because the court will have determined the issues of the claimants have largely been resolved. The confirmation hearing on the plan is expected to begin on July 16.
Latest posts by Beth (see all)
- Student loan debt can my child support be garnished? - October 5, 2015
- Small claims court can I sue my friend? - September 28, 2015
- Can I file bankruptcy without my spouse? - September 16, 2015