HOUSTON, March 16, 2018 /PRNewswire/ -- Constellation
Healthcare Technologies, Inc. ("Constellation" or "the Company"), a
healthcare services organization providing outsourced revenue cycle
management, practice management, and group purchasing services to
U.S. physicians, along with certain of its subsidiaries, today
initiated voluntary proceedings under Chapter 11 of the U.S.
Bankruptcy Code to facilitate an orderly and efficient sale of its
businesses.
The Company is in active discussions with several interested
parties, is working to finalize terms and expects to announce asset
purchase agreement(s) in the near term. Businesses included in the
Chapter 11 filings and related sale process are as follows:
- Allegiance and Orion Healthcorp, Inc., the Company's two
revenue cycle management ("RCM") businesses;
- Integrated Physician Solutions ("IPS"), which contains both
physician practice management and group purchasing capabilities;
and
- the holding company for New York Network Management
("NYNM").
The NYNM independent practice association and management company
that collectively provide contracting and credentialing services to
independent New York physicians
are not included in today's filings, although they will be included
in the sale process.
All Constellation businesses are expected to operate as usual
throughout the sale process, providing all of their current
services to clients and maintaining appropriate staffing and supply
levels.
"After evaluating a range of possible alternatives,
Constellation has determined that our various business divisions
will be better positioned for long-term growth and success under
new ownership with the financial strength necessary to invest in
their offerings and opportunities," said Interim Chief Executive
Officer Timothy J. Dragelin.
"Today's Chapter 11 filings are a critical first step in achieving
this outcome because they allow us to preserve the value of our
businesses while we evaluate potential buyers, provide access to
debtor in possession financing, and help us to separate our
profitable businesses from the significant debt and liabilities
held at the parent Company level. We are taking decisive action
today to give our businesses – and all the people who depend on
them – the best possible future."
The cases are being heard in the U.S. Bankruptcy Court for the
Eastern District of New York.
Steps Taken to Maintain Business Continuity
Constellation has secured a commitment for $7.5 million in debtor in possession ("DIP")
financing from Bank of America to support its ongoing operations
during the sale process. This additional financing, combined with
normal, ongoing cashflows, will help to ensure the Company is able
to meet its go-forward commitments to employees, clients, and
suppliers while also maximizing its chances of successfully selling
its remaining profitable operations.
The Company also has filed a series of motions with the Court
that, when approved, will allow it to maintain its usual employee
compensation and benefit programs, make payments for goods and
services in the normal course, and otherwise operate its business
as usual. These motions are typical of the Chapter 11 process and
are generally granted in the first days of the case.
Sale Process
Constellation plans to complete the intended sale process under
Section 363 of the U.S. Bankruptcy Code within roughly 90 days.
Potential buyers will have the opportunity to submit offers to
acquire assets associated with NYNM, Allegiance, Orion, and IPS
individually or in combination with one another. All offers will be
evaluated to ensure the highest and best acquisition agreement(s)
are achieved for the benefit of Constellation's creditors,
employees, clients, and other stakeholder groups.
"Our goal is to transition each of these businesses to
financially stronger owners that are better able to realize the
full potential of their strong teams, services, and capabilities,"
said Mr. Dragelin. "By completing the sales through the Chapter 11
process, we also are able to definitively address the debt and
liabilities that have burdened these businesses in recent years to
even better position them for long-term growth and success under
the new ownership."
Historical Events Leading to Today's Filings
Constellation was founded as an acquirer of revenue and practice
management services with a vision to offer a one-stop revenue
optimization strategy for independent physicians across the U.S.
The Company took on significant debt to pursue its acquisition
strategy based on what it now knows to be fraudulent information
and cannot service its current debt load based on the actual
operations of the acquired businesses.
When the Board of Directors became aware that there were
discrepancies in the Company's stated and actual earnings, it took
immediate action, including removing a number of executives who
participated in these activities and retaining outside legal and
forensic accounting counsel to conduct an investigation of the
matter. The legal filings submitted to the Court today outline the
evidence of fraud uncovered through the ongoing investigation.
Additional Information
Additional information about Constellation's Chapter 11 cases
can be found at http://dm.epiq11.com/constellationhealth. The
Company also has established a helpline to ensure a prompt response
to questions from suppliers and clients, which may be accessed at
+1- 888-751-4998.
Constellation is advised in this matter by DLA Piper and FTI
Consulting.
Forward-Looking Statements
This press release (including information incorporated or deemed
incorporated by reference herein) contains "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are those involving
future events and future results that are based on current
expectations, estimates, forecasts, and projections as well as the
current beliefs and assumptions of the Company's management. Words
such as "guidance", "outlook", "believes", "expects", "appears",
"may", "will", "should", "intend", "target", "projects",
"estimates", "plans", "forecast", "is likely to", "anticipates", or
the negative thereof or comparable terminology, are intended to
identify such forward looking statements. Any statement that is not
a historical fact and other estimates, projections, future trends
and the outcome of events that have not yet occurred referenced in
this press release, is a forward-looking statement. Forward-looking
statements are only predictions and are subject to risks,
uncertainties and assumptions that are difficult to predict.
Therefore actual results may differ materially and adversely from
those expressed in any forward-looking statements.
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SOURCE Constellation Healthcare Technologies, Inc.