For-profit hospital chain Quorum Health Corp. has filed for Chapter 11 bankruptcy, the company announced Tuesday.
Brentwood, Tenn.-based Quorum is seeking court authorization to continue to operate its hospitals during the bankruptcy proceedings. The company, which had hinted it was considering bankruptcy in recent weeks, has also filed motions that would allow it to pay its employee wages and vendors on time.
Quorum said it entered a restructuring agreement on April 6 with lenders that hold a majority of its outstanding debt. The company said the pre-negotiated Chapter 11 plan will reduce its debt by about $500 million.
A Quorum representative did not immediately return a request for comment Tuesday.
The company said its 23 hospitals will focus on ensuring employees, physicians and providers can continue to care for patients and communities.
"We believe the financial restructuring plan announced today will strengthen our business and enable our community hospitals to continue the important work they are doing in addressing the COVID-19 crisis, as well as serve their patients and communities," Bob Fish, Quorum's CEO, said in a statement.
Quorum said the "first day" relief anticipated under its bankruptcy plan ensures that vendors and creditors that continue to work with the company will be paid in full as usual.
Fish said Quorum has been transparent over the past year about the need to restructure its debt. He said the restructuring agreement will reduce Quorum's debt and interest expense and better position the company for growth.
"The RSA will also build on the significant progress we have made to strengthen our operations," he said. "We are grateful for the support of our financial stakeholders, which we believe represents a statement of confidence in our business and enables us to move through this process on an expedited basis."
Quorum has been losing money since its 2016 spinoff from Franklin, Tenn.-based Community Health Systems, including posting more than $300 million in net losses in 2017 and 2018 combined. The company is down to 23 hospitals, from 38 when it was spun off.
The investment group Mudrick Capital Management, which owns roughly 10% of Quorum's shares, warned the company against entering bankruptcy in a March 23 letter on behalf of its shareholders. On April 3, David Rosner, an attorney representing Mudrick, said he had not heard back.
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Quorum Health Corp. files for bankruptcy - ModernHealthcare.com
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