New LifeCare committee says sale process should allow payment of costs

By Caroline Salls

Pittsburgh, Aug. 1 – The official committee of unsecured creditors appointed for the case of Hospital Acquisition LLC, which operates numerous New LifeCare and LifeCare medical facilities, filed an objection Thursday to the bid procedures for the company’s proposed asset sale, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

“While the committee remains supportive of this sale process, the proposed sale must be considered in the broader context of these cases – specifically, the implications that the sale process will have on the administrative solvency of the debtors’ estates and the conclusion of these cases, whether through a liquidating plan or otherwise,” the objection said.

Specifically, the committee said that, although it knows that the sale process will not yield sufficient proceeds to pay secured lenders in full, that does not mean the assets should be sold without a viable means to pay the costs of the Chapter 11 cases.

In addition, the committee said any sale order should be conditioned on establishment of an appropriate wind-down budget that will be funded with the sale proceeds or other proceeds generated through the collection of accounts receivable.

LifeCare, a Plano, Tex.-based health care consulting and management services company, filed for bankruptcy on May 6. The Chapter 11 case number is 19-10998.

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