World Health Alternatives files Chapter 11 bankruptcy to complete $43 million asset sale

By Caroline Salls

Pittsburgh, Feb. 21 - World Health Alternatives, Inc. filed for Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Delaware in order to sell substantially all of the company's assets, according to a company news release.

The filing also included subsidiaries World Health Staffing, Inc., a California corporation, World Health Staffing, Inc., Better Solutions, Inc., JC Nationwide, Inc., MedTech Medical Staffing of New England, Inc. and MedTech Franchising, Inc.

The company has entered into a stalking horse agreement for the $43 million sale of substantially all of its assets to Jackson Healthcare Staffing, LLC, an affiliate of Jackson Healthcare Solutions, LLC.

The sale also includes about $10 million in assumed liabilities.

Jackson must pay a $2.5 million deposit, with $1 million payable upon entering a purchase agreement and $1.5 million due after entry of the bidding procedures order.

If Jackson is not the high bidder, World Health will pay it a $1.61 million break-up fee.

The initial overbid will be $2.1 million more than the purchase price. Each successive bid must be for at least $100,000 more than the previous bid.

According to the release, the sale is expected to close in six to eight weeks.

In connection with the Chapter 11 filings, the company has secured about $37 million in revolving debtor-in-possession financing facility from CapitalSource Finance, LLC.

Interest will be Prime rate plus 150 basis points.

Maturity will be the earliest of April 26, upon the sale of substantially all of the company's assets, upon consummation of a plan of reorganization or upon acceleration of the maturity upon event of default.

World Health will pay a $378,500 commitment fee.

World Health said it expects that the DIP financing, together with its ongoing revenue stream, will be sufficient to fund its operations, including payment of employee wages and benefits, during the sale process.

The company is seeking interim approval for up to $10 million in credit extensions from the DIP.

According to court documents, the company has $96.63 million in assets and $61.5 million in debt.

The company's largest unsecured creditors include:

• Palisades Master Fund Ltd., Roswell, Ga., with an $8.65 million notes claim;

• Internal Revenue Service, Pittsburgh, with a $6.95 million payroll taxes and penalties claim;

• Bristol Investment Fund Ltd., Los Angeles, with a $5.19 million disputed notes claim;

• McEwen Inc., Seattle, with a $2.21 million acquisition notes claim; and

• Universal Staffing, Orlando, Fla., with a $1.32 million acquisition notes claim.

"After careful consideration we concluded that a sale of the company through a Chapter 11 auction process will best maximize the return for all stakeholders of the company and is the best way for the company to continue providing the level of service its customers expect," president and restructuring officer Benjamin Jones said in the release.

Based in Pittsburgh, World Health Alternatives provides staffing services for the medical industry. Its Chapter 11 case number is 06-10166.

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