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Spheris Wins Bankruptcy Court Approval of Plan Paying Creditors From Sale
Spheris Inc., a medical transcription company, won court approval of its liquidation plan to pay creditors from the sale of its assets.
U.S. Bankruptcy Judge Kevin Gross approved the company’s plan, according to court documents filed yesterday in Wilmington, Delaware.
Under Spheris’s plan, a trust is created to distribute the proceeds and any other remaining assets. Subordinated noteholders, owed about $133.6 million, and other unsecured creditors will share the trust. They are estimated to recover about 23 cents on the dollar. Lenders with claims of about $75.6 million were already paid in full from the sale, court papers show.
Spheris is now officially known as SP Wind Down Inc. after selling almost all its assets, including its name, to rivals MedQuist Inc. and CBay Inc. for about $116.3 million. The units of Mumbai-based CBaySystems Holdings Ltd. also provide medical- transcription services.
Spheris reached a settlement with MedQuist resolving a $21.3 million disputed claim related to the payment of medical insurance costs of former employees at Spheris India Private Ltd. As part of the settlement MedQuist will get full payment of a $750,000 administrative claim, according to court filings.
Revenue Decline
The sale consisted of about $98.8 million in cash and a $17.5 million note, according to court documents. Spheris received court approval in June to sell the note to Black Horse Capital LP for about $13.8 million.
Spheris, based in Franklin, Tennessee, listed debt of about $225 million and assets of about $61 million as of Sept. 30 in Chapter 11 documents filed on Feb. 3.
The company filed bankruptcy after revenue declined due to “significant technology developments” and “accelerated price pressures” within the medical records industry, Chief Restructuring Officer Robert Butler said in court papers.
The case is In re SP Wind Down Inc., 10-10352, U.S. Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporter on this story: Michael Bathon in Wilmington, Delaware, at mbathon@bloomberg.net.
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