Center for Autism files Chapter 11 bankruptcy with $25 million stalking horse deal

By Sarah Lizee

Olympia, Wash., June 12 – The Center for Autism and Related Disorders, LLC filed Chapter 11 bankruptcy on Sunday in the U.S. Bankruptcy Court for the Southern District of Texas.

The company said it has faced significant headwinds since 2020, including operational challenges following the Covid-19 pandemic and increasing labor costs due to inflation.

The debtors’ prepetition capital structure includes $245 million under various credit facilities with Ares Capital Corp. as administrative and collateral agent.

The debtors are seeking approval of an $18 million super-priority senior secured term loan debtor-in-possession facility with the existing lenders.

They have requested interim access to $7.5 million of the DIP facility, as well as approval of consensual use of cash collateral.

The debtors have also lined up a stalking horse agreement with Pantogran LLC for its assets. Pantogran is led by Dr. Doreen Granpeesheh, founder and former chief executive officer of the debtors.

The agreement provides for a $25 million purchase price for a going-concern acquisition of substantially all of the debtors’ assets.

The stalking horse bid will set the floor for bidders in the continued marketing process.

Under the debtors’ proposed bid procedures, the general bid deadline is 5 p.m. ET on July 14, an auction would be scheduled for July 17, and a sale hearing would take place on July 20.

The debtors’ prearranged plan contemplates a waterfall distribution of the net cash proceeds and the wind down of the post-sale estates.

According to the disclosure statement, other secured claims and other priority claims are unimpaired by the plan.

Holders of credit facility claims are the only ones entitled to vote on the plan, and most have agreed to vote in favor of it.

Holders will receive their pro rata share of the sale and wind-down proceeds following payment in full of all senior claims, provided that any portion of a holder’s credit facility claim that isn’t fully satisfied will still constitute an allowed credit facility claim up to the value of any remaining credit facility collateral, and provided further that any portion of a claim that exceeds the value of the remaining collateral will constitute a deficiency claim and be treated as a general unsecured claim.

General unsecured claims will be discharged with no distribution.

No distributions will be made for any intercompany claims, existing parent interests or section 510(b) claims.

Intercompany interests will be addressed at the option of the wind-down debtors.

The debtors are hoping to schedule the plan timeline in line with the sale process, with the combined hearing on confirmation of the plan and final approval of the disclosure statement set for July 20.

In the petition, the debtors listed 1,000 to 5,000 creditors, $50 million to $100 million in assets and $100 million to $500 million in liabilities.

The largest unsecured creditor is Douglas Emmett 2000, LLC, based in Santa Monica, Calif., with a $1.47 million lease obligation claim. No other creditors were listed with unsecured claims of $1 million or more.

Kirkland & Ellis LLP is bankruptcy counsel, Jackson Walker LLP is local bankruptcy counsel, Triple P RTS, LLC is restructuring adviser and Livingstone Partners LLC is financial advisor and investment banker for the debtors.

The Henderson, Nev.-based autism treatment provider filed Chapter 11 bankruptcy under case number 23-90709.

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