Millennium Health bankruptcy plan confirmed, opt-out lenders appeal

By Caroline Salls

Pittsburgh, Dec. 15 – Millennium Health, LLC’s pre-packaged plan of reorganization was confirmed by the U.S. Bankruptcy Court for the District of Delaware, according to an order filed Dec. 14.

The court also approved the disclosure statement related to the plan.

As previously reported, a restructuring agreement was reached with near unanimous support of debtholders and current equityholders and calls for a reduction in Millennium’s debt by more than $1.15 billion and a contribution of $325 million by current equityholders.

As a result of the restructuring, the lenders will become the new owners of Millennium.

The $1.75 billion of obligations due under the company’s 2014 credit agreement will be converted into $600 million of new term loans and 100% of the beneficial ownership of Millennium.

In addition, two trusts will be established and vested with the right to prosecute and settle claims retained by the reorganized company or contributed by the consenting lenders for the benefit of the pre-bankruptcy lenders or consenting lenders.

Millennium said in court documents that equityholders Millennium Lab Holdings, Inc. (MLH) and TA Millennium, Inc. agreed to contribute $325 million to or for the benefit of the company, comprised of $206 million plus interest to be paid to the Department of Justice in connection with settlement agreements, as well as an amount equal to $325 million less the settlement funding contribution to be paid to Millennium to reimburse it for a $50 million initial deposit for fees and costs owed to the Department of Justice and for working capital purposes.

Millennium Lab Holdings agreed to pay $178.75 million of the settlement contribution and TA agreed to pay $146.25 million.

The company said no creditors other than lenders will be affected by the restructuring plan.

As only existing lenders and current equityholders are expected to be affected by the terms of the restructuring, Millennium said all other creditors including vendors, suppliers, trade partners and other counterparties, are expected to receive all payments due to them in the ordinary course of business.

Existing equity interests in the holding company will be reinstated, while equity interests in the debtor subsidiaries will be cancelled and extinguished.

Stay requested

According to a separate Dec. 14 court filing, Millennium’s opt-out lenders appealed the plan confirmation order.

The lenders said in a related stay motion that they objected to confirmation of the plan because the court lacks subject-matter jurisdiction to approve the broad third-party releases, injunction and bar order and the accompanying judgment reduction provision contained in the plan.

The opt-out lenders also said a non-consensual third-party release is impermissible.

The court granted a temporary stay of the confirmation order on Dec. 15. The temporary stay is pending the conclusion of the hearing on the full stay motion.

On Dec. 9, the opt-out lenders filed a complaint against non-debtors TA Associates Management, LP, TA Millennium, Inc., Millennium Lab Holdings, Inc., James Slattery and Howard J. Appel asserting direct claims for RICO violations, fraudulent inducement, aiding and abetting fraud and civil conspiracy.

Millennium is a San Diego-based laboratory-based diagnostic testing provider. The company filed for bankruptcy on Nov. 10 under Chapter 11 case number 15-12284.

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