A thumbs up from its unsecured creditors -- including its affiliated doctors -- seems to be about all FPA Medical Management needs to get out of bankruptcy.
The U.S. Bankruptcy Court in Wilmington, Del., delayed a Feb. 18 hearing that would approve FPA's reorganization plan and set up its emergence from Chapter 11 bankruptcy protection. The court postponed the hearing until Feb. 24, pastModern Physician's deadline.
If all creditors accept the plan, the Miami-based physician practice management company will have a hearing April 7 to officially exit bankruptcy.
The Bankruptcy Court granted the postponement to give lawyers from the company and the committee of unsecured creditors more time to negotiate FPA's third version of its disclosure statement, submitted Jan. 12. The statement includes its reorganization plan.
Neither party would reveal the remaining points of argument, except to say the two sides aren't far apart. In past court filings, unsecured creditors have said they objected to FPA's reorganization plan because it didn't include such points as how the employee stock option plan would be structured, the terms of payer agreements with FPA and how the company would obtain financing to exit bankruptcy.
Past negotiations have resulted in doctors and other unsecured creditors getting a bigger share of FPA's to-be-issued stock than in the company's first plan. But none of the approximately 30,000 secured and unsecured creditors will receive anywhere near the collective $2.3 billion in claims they've filed.
Unsecured creditors would be given 6% of the 20 million shares of stock FPA plans to issue after it emerges from bankruptcy. Secured creditors, including banks that have lent FPA a total of $319 million, would get the other 94%.
In FPA's first plan, issued Sept. 30, 1998, unsecured creditors would have only received warrants for the right to buy stock. FPA's second version, issued Dec. 29, included the 6% stock distribution, but unsecured creditors objected to the plan because it hadn't been approved by secured creditors.
The latest version also includes information on what FPA would look like if it emerges from bankruptcy.
FPA says it would own the assets of 382 doctors in Florida, Georgia, Kentucky, Missouri, New York, North Carolina, Virginia and the District of Columbia. It also would keep its Sterling Healthcare emergency-room division, founded by current FPA Chairman and Chief Executive Officer Stephen Dresnick, M.D.
In addition, FPA would keep some clinics in Texas, although it did not disclose the number of doctors involved.
The doctors at Axminster Medical Group, a Los Angeles clinic FPA previously said would stay with the company, bought their practice assets back Dec. 9. No financial details were available.
FPA also says it is facing formal inquiries from the Securities and Exchange Commission and the National Association of Securities Dealers.
The SEC is reviewing transactions and events between Jan. 1, 1997, and May 15, 1998, when FPA announced an unexpected $9.1 million first-quarter loss on $392 million in revenues and a $200 million charge against earnings for the second quarter.
The NASD, which runs the Nasdaq National Market on which FPA stock traded until mid-1998, is reviewing FPA's announcement of those losses and charges.