The U.S. Bankruptcy Court in Delaware on Thursday approved measures providing protection to InSight Health Services Holding Corp. investors holding $300 million in senior secured notes due for payment in 2011.
The court ruling also will allow InSight, a diagnostic-imaging services company headquartered in Lake Forest, Calif., to maintain a revolving credit line of up to $30 million, according to a company news release.
The company, along with its subsidiary InSight Health Services Corp., filed for Chapter 11 bankruptcy protection earlier this week in an effort to reorganize and manage growing debt.
The court also has scheduled a July 9 confirmation hearing to review reorganization plans for InSight, which include the company’s current effort to offer common stock to investors holding senior notes. The exchange, initiated in March, aims to cancel up to $194.5 million in debt. The company had tendered exchanges for approximately $163.5 million as of May 21.
Earnings for InSight dropped 3.3%, from $316.9 million to $306.3 million, between June 2005 and June 2006. Company officials attribute the decline to decreased reimbursement from Medicare and other payers, and increased competition within the diagnostic-imaging market.
InSight’s operating subsidiary, InSight Health Corp., is not a party to the bankruptcy proceedings and will continue normal operations throughout the restructuring process, according to InSight officials. -- by Shawn Rhea