Envision Healthcare receives confirmation of reorganization plans

By Sarah Lizee

Olympia, Wash., Oct. 11 – Envision Healthcare Corp. announced Wednesday that its Chapter 11 plans of reorganization were confirmed by the U.S. Bankruptcy Court for the Southern District of Texas, according to a press release.

Under the terms of the confirmed plans, Envision will eliminate 70% of its prepetition funded debt.

The company said the plans ensure that Envision and AmSurg will remain partners to their clinicians, physician partners, clients, vendors and suppliers following the reorganization.

The debtors hope to emerge from Chapter 11 in the coming weeks.

Plan terms

As previously reported, the plans contemplate a restructuring support agreement the debtors entered into with its key stakeholders in May.

The terms of the RSA establish the framework for a restructuring that will position Envision and its AmSurg unit for future growth as two separate businesses.

Specifically, the key terms of the RSA include the following:

• Repayment or refinancing of the company’s asset-based lending facility;

• Equitization of first-out term loan claims and second-out term loan claims;

• Issuance of three-year warrants convertible into up to 5% of the new common stock of the reorganized Physician Services, distributed to those holders of third-out, fourth-out and unsecured notes claims on a pro rata basis to the extent holders vote to accept the plan as a class;

• If holders of third-out, fourth-out and unsecured notes claims vote to reject the plan, the claims will be canceled without any distribution;

• Repayment or refinancing of the AmSurg revolving credit facility;

• Repayment of the AmSurg first-lien facility;

• Impairment of general unsecured claims at debtors comprising the AmSurg silo; and

• Cancellation of existing equity interest in Envision Healthcare.

Under the terms of the RSA, the AmSurg and Envision Physician Services businesses will be separately owned by some of their respective lenders.

AmSurg will purchase the surgery centers held by Envision for $300 million plus a waiver of intercompany loans held by AmSurg LLC.

All of Envision’s debt, with the exception of a revolver for working capital, will be equitized or canceled, deleveraging about $5.6 billion.

The company is expecting a 29% recovery for holders of second-out term loan claims, and a less than 1% recovery to holders of unsecured funded debt claims and general unsecured claims.

Envision is a Nashville-based provider of physician-led services and post-acute care and ambulatory surgery services. The company filed bankruptcy on May 15 under Chapter 11 case number 23-90342.

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