Sometimes, the only way for a company to reorganize is through a
formal, in-court chapter 11 case. In other situations, the best
way for a company to reorganize may be through an out-of-court restructuring. For debtors and creditors, the choice
of
whether to proceed in or out of court is a difficult one, and one that
ST&G, with its unparalleled experience, will guide you through.
Deciding which way to go requires the careful consideration of many
factors. Are there urgent operational or legal problems that
likely will need to be addressed before an out-of-court restructuring plan can be
implemented? Will the restructuring generate a better result if the
debtor has the benefit of certain strategic options that are available only in an in-court case? What is the exit
strategy?
Asking (and answering) key questions like these
is what we do, every day. All restructurings, big or small, in court or out, involve an almost
infinite array of choices, risks, and outcomes. No other law firm
has the expertise and experience that ST&G brings to the table to
make sure that our clients get the best possible deal, every time.
Case in point: ST&G
represented Mariner Post-Acute Network, Inc.; Mariner Health Group, Inc.; and
187 of their affiliates (collectively, "Mariner") in their chapter 11 cases. The Mariner entities
collectively comprised one of the largest long-term care providers in the
country, consisting of more than 320 skilled nursing facilities, 13 long term acute care hospitals, a group of 31 institutional pharmacies, and related
businesses. Primarily as a result of federal statutory and regulatory changes in the basis for compensation for
services provided to Medicare and Medicaid patients, the Mariner entities were
suffering enormous financial losses and were no longer able to service their
nearly $3 billion in liabilities.
ST&G
initially represented the Mariner entities in out-of-court negotiations
with their credit agreement lenders and bondholders. When it became apparent that
the relief
Mariner needed could be provided only in a chapter 11 case, ST&G
negotiated
the terms for orderly chapter 11 filings.
Following meticulous planning for operation as chapter 11 debtors in
possession, the Mariner entities were able to operate in chapter 11
without
disruption to the quality care of their more than 40,000 patients.
With ST&G's
intensive, day-to-day involvement, the Mariner entities confronted and overcame
a wide array of economic and legal challenges involving their two competing bank
groups, bondholders, dozens of holders of project-based mortgages, hundreds of
leases, the Centers for Medicare and Medicaid Services and other state and federal agencies, hundreds of tort claims, and other constituents. Ultimately, ST&G was successful in
negotiating a plan of reorganization under which most of Mariner's $3 billion in
liabilities were converted to equity, and Mariner emerged from chapter 11 as a
healthy business enterprise. The equity
of the reorganized enterprise proved to be quite valuable, as Mariner was
subsequently sold on terms that were favorable for holders of the
post-reorganization shares.
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