Vanguard Healthcare unsecured creditors oppose confirmation of plan

By Caroline Salls

Pittsburgh, March 20 – Vanguard Healthcare, LLC’s official committee of unsecured creditors objected to the company’s proposed first amended plan of reorganization, according to a Friday filing with the U.S. Bankruptcy Court for the Middle District of Tennessee.

The committee said the plan cannot be confirmed because it “is not feasible,” has not been proposed in good faith and is not in the best interests of creditors.

In addition, the committee said the plan cannot be confirmed by “cram down” if any class five creditors vote to reject it because it discriminates against them unfairly.

According to the objection, unsecured creditors are to be repaid over a period of seven years under the proposed plan, with the first payments beginning six months from the plan effective date.

Meanwhile, the committee said “in the best case scenario,” unsecured creditors will have two and a half years of payments remaining under the plan when a projected $44 million balloon payment obligation comes due on Vanguard’s secured debt.

The committee said the plan also contains “overly generous terms” for secured lenders, including giving them a “disproportionately large” percentage of any sale proceeds.

The creditor group said this allows the Vanguard debtors to “cannibalize their assets for the benefit of the class 1 secured lenders and to the detriment of unsecured creditors.”

Vanguard is a Brentwood, Tenn., long-term care provider. The company filed bankruptcy on May 6, 2016 under Chapter 11 case number 16-03296.

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