Thursday, April 19, 2012

Small Smiles Dental - Church Street Health Management Auction Postponed Until May 11-May 22 Hearing to Approve Any Offers.

Small Smiles Dental - Church Street Health Management Auction Postponed Until May 11

Church Street Health Management LLC will auction the business on May 11, rather than April 20. The provider of management services for 67 dental practices in 22 states reported a $2.1 million net loss in March on total revenue of $11.6 million.

Unless outbid, existing first-lien lenders are to buy the business in exchange for $25 million in debt. Other bids are now due May 4, rather than April 16. The hearing to approve the sale will take place May 22.

Isn’t this a nice way of saying it’s being “repo’d”?

The official creditors’ committee was given the right by the bankruptcy judge to require the company to turn over copies of insurance policies. The committee says that the largest unsecured claims are held by patients who say they were given services unnecessarily. Seeing the policies will help, the committee says, in deciding if the insurance company was entitled to deny coverage of the claims.

Church Street said in a monthly operating report filed with bankruptcy court that earnings before interest, taxes, depreciation and amortization in March were $867,000. Depreciation in the month was $986,000 and interest expense was $120,000.

Church Street specializes in providing dental care to children whose medical expenses are covered by government- sponsored programs. Bankruptcy resulted from a $24 million settlement in January 2010 with state and federal authorities that led to negative publicity and lawsuits.

The company’s debt is structured in compliance with Islamic Shariah financing regulations. There is about $131.5 million owing on first-lien obligations, plus a $25.6 million second- lien. There is an additional $152 million on three subordinated debts.

It’s only Shariah compliant because they created several companies between it and the First Islamic Bank a/k/a Arcapita.

Assets are on the books for $895 million, with debt totaling $303 million, a court filing says.

The case is In re Church Street Health Management LLC, 12- 01573, U.S. Bankruptcy Court, Middle District of Tennessee (Nashville).

Selection of Bankruptcy Documents