Astria Health’s efforts to emerge from Chapter 11 bankruptcy protection likely will continue well into the first quarter of 2020, and might include selling some assets.
If the U.S. Bankruptcy Court for the Eastern Division of Washington approves a motion by the Yakima-based health care organization, Astria exclusively will have until Jan. 31 to file a reorganization plan. It would then need creditor approval of that plan by March 31.
During an exclusivity period, creditors cannot submit competing reorganization plans without permission from the court.
When Astria filed for bankruptcy protection in May, it aimed to emerge from bankruptcy by the end of the year. But by September, the U.S. Bankruptcy Court had already granted it an extension.
The motion for a second extension was filed Nov. 4, the end of the revised period when Astria Health could exclusively file a reorganization plan. In that motion, Astria Health attorney Samuel Maizel wrote that Piper Jaffray, Astria Health’s investment banker, needed extra time to secure exit financing.
Maizel also wrote that Astria Health was “confident they will secure exit financing that would support a reorganization plan,” but if it was unable to secure such financing, it would also be “in a position to sell some or all of (its assets).”
Astria Health operates three hospitals — Astria Regional Medical Center in Yakima, Astria Sunnyside Hospital and Astria Toppenish Hospital — and a network of clinics throughout the Yakima Valley.
“Therefore, whether proceeding by refinance, sale or a combination thereof, resolution of these Chapter 11 cases should become clearer — if not resolved — by the end of January 2020,” Maizel wrote in the Nov. 4 filing.
Shortly after Astria Health filed for bankruptcy protection, CEO John Gallagher said that while the possibility of an “alternative transaction” — selling assets — was acknowledged as a possibility in court documents, it was focused on reorganizing and had no plans to sell.
Astria Health declined to answer specific questions from the Yakima Herald-Republic about its Nov. 4 filing, but submitted a written statement by email.
In that statement, the organization said it is now on a “dual path” that includes seeking bankruptcy exit financing. A second option that would involve selling assets may be needed to “continue forward on a positive track” with creditors.
“Astria Health has received positive feedback from the lender market, through its investment banker, and remains optimistic we will be able to obtain financing to exit Chapter 11,” the organization said in its statement.
A status conference for Astria Health’s case is scheduled for 11 a.m. Friday in U.S. Bankruptcy Court in Yakima.