On February 24, 2015, ProNerve Holdings, LLC and 8 affiliated companies filed voluntary chapter 11 petitions in Delaware. The case is docketed at 15-10373, and has been assigned to The Honorable Kevin J. Carey.
According to the Declaration of George D. Pillari filed in support of the petition, the Debtors are headquartered in a suburb of Denver, Colorado. The Debtors provide IOM services to acute care hospitals, health systems, specialty hospitals, ambulatory surgical centers, surgeons and physician groups in more than 25 states.
The Debtors employ over 200 full-time and part-time employees, provided services in nearly 25,000 patient cases in 2014 and, in 2014, had net revenue of approximately $31 million and a net loss of approximately $9 million.
According to the Pillari Declaration, as of the petition date, the Debtors had aggregate outstanding principal amounts under their various loan commitments in excess of $43 million. In addition, the Debtors have approximately $5.3 million of outstanding unsecured debt, comprised mostly of professional services, trade debt, employee severance and acquisition earnouts.
The Pillari Declaration points to efforts to increase market share through practice acquisitions since 2012 as one of the reasons precipitating the filing: “Unfortunately, many of these strategic acquisitions have resulted in significant accrued liabilities on account of earnout obligations, which have affected ProNerve’s balance sheet, including its ability to timely service the loan commitments . . . . Additionally, there has been a high rate of turnover among ProNerve’s senior management, which has created operational difficulties. For example, over the past 3 years, ProNerve has had four different CEOs . . . and four different CFOs.”
In the bankruptcy case, ProNerve anticipates attempting to sell substantially all its assets to a stalking horse bidder. The bidder previously purchased the loan commitments and intends to credit bid for the assets. The current form of asset purchase agreement proposes a purchase price of $35 million in the form of a credit bid, plus assumption of certain liabilities. The Debtors are seeking permission for an auction to occur on March 27, with a sale order to be entered not later than March 31.