M*Modal emerges from Chapter 11 bankruptcy case, reduces debt by 55%

By Caroline Salls

Pittsburgh, Aug. 1 – M*Modal Inc. completed its financial restructuring and emerged from Chapter 11 bankruptcy on Thursday, reducing its debt by 55%, according to a news release.

The company’s second amended plan of reorganization took effect on Thursday. The plan was confirmed on July 21 by the U.S. Bankruptcy Court for the Southern District of New York.

“Our new capital structure will better support M*Modal’s continued investment in delivering innovative transcription, coding and speech technology solutions and will provide a stronger foundation to execute on our strategic plan,” chief executive officer Duncan James said in the release.

As previously reported, M*Modal said the plan reflects the terms of an agreement with its controlling bondholders and lenders on the terms of a financial restructuring.

Creditor treatment

Treatment of creditors under the plan will include the following:

• Administrative claims, priority tax claims, priority claims, debtor-in-possession financing claims and convenience claims will be paid in full in cash;

• Holders of first-lien credit agreement claims will receive a new term loan, 93% of the stock of reorganized M*Modal Holdings, Inc. or one of its affiliate debtors before dilution for stock warrants to be issued in connection with the plan and a management stock option plan and $8.24 million in cash;

• Holders of general unsecured claims will receive 7% of reorganized holdings equity interests before dilution, warrants and $860,196 in cash, provided, however, that holders of these claims, other than noteholders, can elect to receive cash equal to 3.4% of the claim;

• Holders of subordinated claims will receive no distribution except for the extent the court elects not to subordinate them, in which case they will be treated as either general unsecured claims or convenience claims, depending on their size;

• Existing equity will be cancelled with no distribution for equityholders;

• Intercompany equity interests will be reinstated; and

• Intercompany claims will either be cancelled or reinstated, at the debtors’ option.

Financing commitment

Last month, M*Modal received court approval to enter a commitment for a $50 million senior secured exit revolving loan facility.

Under the commitment letter, Wells Fargo Bank, NA will structure, arrange and syndicate the five-year facility. Wells Fargo will also be the administrative and collateral agent.

The $50 million facility includes a $2.5 million letter-of-credit subfacility and $10 million for swingline loans.

Interest will be based on quarterly average excess availability, ranging from the Base rate plus 100 basis points to the Base rate plus 150 bps or Libor plus 200 bps to Libor plus 250 bps.

The financing will be used to fund the company’s Chapter 11 plan obligations, to provide working capital to the reorganized M*Modal debtors and for general corporate purposes.

M*Modal, a Franklin, Tenn.-based provider of clinical documentation services, filed for bankruptcy March 20. The Chapter 11 case number is 14-10701.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.