Pipeline Health moves back sale timeline for California, Texas assets

By Sarah Lizee

Olympia, Wash., Nov. 28 – Pipeline Health System, LLC moved some dates under the bid procedures for its California and Texas assets, according to a notice filed Monday with the U.S. Bankruptcy Court for the Southern District of Texas.

The company moved the bid deadline to 5 p.m. ET on Dec. 8, the auction to Dec. 12, and the sale objection deadline to Dec. 14.

As reported last week, the company named winning bidders for its Illinois assets. An auction for those assets was canceled, and the company selected Ramco and Resilience as the winning bidders.

Before filing the Chapter 11 cases, the debtors negotiated a sale of their Illinois facilities to Ramco Healthcare Holdings, LLC, which in turn planned to lease the premises to Resilience Health to continue operations.

Ramco agreed to purchase the Illinois facilities’ underlying real estate for $92 million. In addition, Resilience agreed to take the equity interests in the entities operating the Illinois facilities under a membership-interest purchase agreement in exchange for the assumption of liabilities.

In the following weeks, however, the buyers indicated they were not able to close by the Aug. 30 deadline, and they terminated the asset purchase agreement.

After the deadline passed, Jefferies LLC worked to solicit interest from alternative purchasers who would be able to acquire the assets on a going-concern basis.

Following weeks of “hard-fought negotiations” Pipeline Health and Ramco and Resilience were able to agree on a transaction on essentially the same terms as before the bankruptcy filing.

However, the chief difference is now there will be a bifurcated closing whereby the first closing will be for the membership interests and the second closing will be for the real estate.

The membership interest sale is expected to close on Dec. 2.

The membership interest sale excludes malpractice claims and liabilities relating to certain multifamily contracts. Upon closing of the membership interest sale, the leases will be amended so that the rent obligations will be abated for the first 30 days and then after the 30 days the buyer will owe $1 million in rent to the property buyer. Additionally, there will be a transfer of an approximately $1.9 million payroll credit to the buyers.

For the real estate sale, the $92 million total purchase price will be $25 million in cash, $67 million in the form of seller financing, a $3 million previously paid deposit against the purchase price and then upon the maturity and cash settlement of a seller note for at least $30 million, the PropCos buyer will transfer $30 million in cash to Resilience to satisfy certain agreed credits.

A sale hearing for the Illinois assets is scheduled for Nov. 29.

Pipeline Health System is an El Segundo, Calif.-based community-focused health care network. It filed bankruptcy on Oct. 2 under Chapter 11 case number 22-90291.

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