Foley & Lardner LLP partner Roger Strode is quoted in the Home Health Care News article, “Modivcare’s Bankruptcy Highlights The Home-Based Care Industry Pressure Cooker,” providing insights on bankruptcy trends in the home-based health care industry.
Discussing Chapter 11 reorganizations, Strode explained that companies “try to negotiate with lenders, negotiate with equity holders, negotiate with any creditors.” He noted, “They have to try to get themselves reorganized. They may sell some assets. They may sell businesses.”
Strode said that although the goal is financial recovery, the process can often turn into a liquidation. “We think, at the time, there’s going to be a reorganization of the business,” he continued. “But they’re going to come out of the bankruptcy, and then by the time you get through the whole process, the bankrupt company has sold everything, and they’ve just liquidated everything. They turned everything they have into cash in an attempt to pay off their creditors.”
The likelihood of emerging from bankruptcy successfully is limited if lenders have lost patience, Strode warned. “If you’ve got lenders that are basically saying, ‘We’ve run out our string with you people, we need to be paid,’ your chances of getting out of the bankruptcy aren’t great,” he added.
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