Healthcare America's banks will exchange their $225 million in debt for 100% equity in the chain of 14 hospitals.
That exchange is the essence of a Chapter 11 bankruptcy reorganization plan filed by Healthcare America with the U.S. Bankruptcy Court in Austin, Texas, last week. The banks, which are the company's only creditors, have already agreed to the plan, officials said.
This will be Healthcare's second round through Chapter 11 in the past few years.
Under this plan, the company's 1,300 shareholders would receive nothing unless the banks sell the company or any of its hospitals. If that takes place, shareholders would receive 2% on the first $100 million of proceeds and 2.5% on the next $20 million. That would amount to a maximum of $2.5 million.
The company also named Austin healthcare executive John P. Harcourt Jr. president and chief executive officer. He replaces Kevin P. Sheehan, who resigned.