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M-Modal files for Chapter-11 bankruptcy relief

M-Modal files for Chapter 11 bankruptcy protection


By Joseph Conn
Posted: March 20, 2014 - 3:30 pm ET
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M-Modal, a Franklin, Tenn.-based privately held provider of medical transcription services, speech recognition and natural language processing technology, announced it has filed for voluntary Chapter 11 bankruptcy relief. The filing in U.S. Bankruptcy Court in New York comes less than two years after the company was acquired for a reported $1.1 billion by an investment unit linked to J.P. Morgan Chase & Co.

“Throughout this process we are not changing our operational execution or strategy, and our operations will continue as normal,” said M-Modal CEO Duncan James in a news release. The release added that the company's operations “are expected to continue in the normal course throughout the restructuring process.”

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“When M-Modal was taken private in 2012,” James said, “the acquisition was financed with a capital structure aligned with a specific set of assumptions that are no longer relevant.” The statement did not specify what those assumptions were, only that they created “a need to restructure the company's balance sheet to better align with changing market dynamics and refinements to our strategy.”

“We intend to use the court process to significantly strengthen M-Modal's balance sheet and improve the company's financial flexibility by reducing our debt burden and establishing a capital structure that supports our investment in the future,” James said.

In August 2011, MedQuist Holdings, Franklin, completed the acquisition of Pittsburgh-based M-Modal for $48.1 million in cash at closing; another $28.8 million in cash payments over the next three years; $13 million in fees and other transaction costs; and 4.1 million shares of MedQuist Holdings' common stock.

The total value of the deal was reported at $130 million. It was a union that merged the transcription service business of MedQuist with the speech and natural language processing capabilities of M-Modal into one company, which kept the M-Modal name.

M-Modal was acquired and taken private in August 2012 by an affiliate of One Equity Partners, the private investment arm of J.P. Morgan Chase, for a reported $1.1 billion.

M-Modal lists among its clients more than 3,800 hospitals, clinics and physician practices. Its core speech technology business has come under pressure from a range of newer technologies. It listed liabilities of $852 million and assets of $626 million in its court filings.

Follow Joseph Conn on Twitter: @MHJConn


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