Elements Behavioral Health secures confirmation of plan of liquidation

By Caroline Salls

Pittsburgh, Feb. 13 – Elements Behavioral Health, Inc.’s plan of liquidation was confirmed Wednesday by the U.S. Bankruptcy Court for the District of Delaware.

Under the plan, creditor trust assets will be transferred to a creditor trust, any acquired assets not previously transferred to Project Build Behavioral Health, LLC (PBBH) will be transferred to PBBH as part of a sale closing, and, after completing all of their ordinary course business operations and fiduciary obligations, the reorganized Elements debtors will be dissolved.

To the extent any residual assets remain on the plan effective date, the reorganized debtors will wind down and liquidate those assets, with any proceeds to be paid to PBBH in partial satisfaction of its senior secured liens on the assets.

Holders of administrative expense claims, priority claims, priority tax claims and secured tax claims will be paid in full in cash.

In exchange for its debtor-in-possession financing claims, PBBH will receive a dollar-for-dollar credit for the portion of the acquired assets equal in value to the full amount of the DIP facility claims outstanding on the final sale closing date.

In exchange for its first-lien claims, PBBH will receive a dollar-for-dollar credit equal to the difference between $65 million and the DIP credit, the proceeds of the liquidation of the debtors’ residual assets, the balance of Comerica settlement funds returned to the Elements estates in excess of the first $400,000 designated for the creditor trust and the proceeds from the liquidation or administration of any other assets that are not creditor trust assets.

Holders of second-lien claims and general unsecured claims will receive a beneficial interest in the creditor trust, entitling them to a share of net cash derived from the trust assets.

Other secured claims will either be paid in full in cash, the holders will receive the collateral securing the claims or the claims will be otherwise rendered unimpaired.

Equity interests and intercompany claims will be cancelled, and holders will receive no distribution.

Elements is a Long Beach, Calif.-based behavioral health company. The company filed bankruptcy on May 23, 2018 under Chapter 11 case number 18-11212.

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