Ryan K. Cochran, Member of the Firm in the Health Care & Life Sciences practice, in the firm’s Nashville office, co-authored an article in AHLA’s Business Law and Governance Practice Group, titled “Why You Should Learn the Playbook: Know the Game Plan for Distressed Acquisitions and Divestitures.” (Read the full version – subscription required.)
This Briefing is part one of a three-part series on distressed health care sales. Part one provides a market snapshot and an overview of distressed sales. Part two will discuss and report on market terms for commonly negotiated business terms in distressed sales. Part three will discuss seller and purchaser considerations in negotiating sale terms for a court-approved stalking horse auction process.
Following is an excerpt:
For a health care company in distress, the “playbook” contains common themes. Typically, there are only a few ways out of distress: (i) a new equity infusion, (ii) additional financing, (iii) a modification of repayment terms on existing financing, (iv) a restructuring or turnaround of the business, or (v) a liquidation by winding down the business or a sale. Where a company or its creditors have determined that a sale process presents the best opportunity to maximize value, there are two options to provide for a court-approved sale “free and clear” of unpaid liens, claims, and encumbrances. One is a sale effectuated in a bankruptcy case. A second is a sale accomplished in a receivership proceeding.
