Magellan Health Services, Columbia, Md., filed for Chapter 11 bankruptcy protection in New York in a bid to reduce its nearly $1 billion debt by half. The company said it hopes to emerge in the fall with $500 million less debt. Magellan, the nation's largest behavioral healthcare firm, said a number of key creditors have agreed to a proposed financial restructuring, and it has obtained commitments for an additional equity investment of $50 million. Magellan said it also has renewed a crucial contract with Aetna through 2005 with an option to extend. The company doesn't expect disruptions to service as a result of the filing, CEO Steve Shulman said. Shulman, who previously headed Prudential HealthCare, joined Magellan last year, shortly after the company's banks approved a deal to keep Magellan from defaulting on some $300 million in debt. Magellan's behavioral healthcare programs cover roughly 68 million people. -- by Julie Piotrowski
$1 billion in debt, Magellan files Chapter 11
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