Boca Raton-based Promise Healthcare Group LLC, a hospital and nursing home chain, has filed for Chapter 11 bankruptcy reorganization.
In a petition filed with a Delaware bankruptcy court on Nov. 5, the company said it had debt exceeding $565 million, plus accrued and unpaid interest of $110 million, accrued expenses and accounts payable of about $94 million, and capitalized leases of about $13 million.
According to the petition, the company has hired FTI Consulting Inc. to assist in “evaluating strategic and financial alternatives to improve liquidity” and appointed FTI’s senior managing director for corporate finance and restructuring, Andrew Hinkelman, as chief restructuring officer and interim chief financial officer.
Under Chapter 11 bankruptcy, a company’s debtor remains in control of the reorganizing business as it seeks restructuring and new financing.
A statement by Hinkelman to the court said Promise Healthcare, with 4,466 employees, operates 16 acute care hospitals and two skilled nursing facilities across nine states. In Florida, Promise Healthcare operates hospitals in Miami, Fort Myers and The Villages.
“While I believe that the Debtors’ overall business is fundamentally strong, the Debtors have been operating with an unsustainable balance sheet due to current industry dynamics and certain underperforming facilities within the Debtors’ portfolio,” the statement said.
The filing seeks approval of $85 million in post-bankruptcy financing from Wells Fargo Bank, which would keep the company and its properties in operation during the restructuring process.
During the bankruptcy, the company intends to sell off two of its hospitals, in Los Angeles and St. Louis, Mo., as well as real estate in San Diego, while it negotiates sale or restructuring of its remaining assets, Hinkelman’s statement says. He added that the company intends to exit the bankruptcy in six months.
According to a 2017 Sun Sentinel story, the company was founded in 2003 by Peter Baronoff, a former Boca Raton City Council member, with the goal of offering superior care for seriously ill patients. Baronoff won the Sun Sentinel Co.’s 2016 Excalibur Award for Business Leader of the Year in Palm Beach County. He resigned as the company’s CEO early this year and resigned from the board of directors in May, Hinkelman’s statement said.
Richard Gold, the company’s president and chief operating officer, resigned in July.
While net revenue increased from $489.5 million in 2015 to $512.2 million in 2016, it declined to $462.5 million in 2017 as the company reported an operating loss of $25.2 million.
Factors contributing to the bankruptcy included sharp decreases in Medicare reimbursement rates for patient stays in 2015 and 2016, the filing states, as well as “significant” investments in new business projects that have since been abandoned.
