LifeCare, a Plano, Texas-based long-term acute-care hospital operator, announced today that it has filed for bankruptcy and that its senior secured lenders are taking over the company four months after it defaulted on an interest payment.
LifeCare filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware to implement the transaction, the company said in a new release (PDF)
. JPMorgan Chase will provide $25 million in debtor in possession financing, subject to court approval. The company also has $20 million in cash on hand.
The company has requested a hearing on Thursday to continue to honor benefits programs for its employees.
LifeCare has been seeking a long-term solution to its debt woes
since it failed to make the $5.5 million interest payment due Aug. 15 on its senior subordinated notes. It had $456.4 million in debt as of June 30 and has been working with the financial adviser Rothschild Group since May 8 to weigh its options.
One of those options is a sale, and LifeCare said it plans to ask the bankruptcy court for permission to look for other potential candidates to buy the company.
The senior secured lenders' acquisition vehicle is called Hospital Acquisition LLC.
According to the release, LifeCare currently operates 27 long-term acute-care hospitals in 10 states.