HOUSTON, March 16, 2018 /PRNewswire/ -- Constellation Healthcare Technologies, Inc. ("Constellation" or "the Company"), a healthcare services organization providing outsourced revenue cycle management, practice management, and group purchasing services to U.S. physicians, along with certain of its subsidiaries, today initiated voluntary proceedings under Chapter 11 of the U.S. Bankruptcy Code to facilitate an orderly and efficient sale of its businesses.
The Company is in active discussions with several interested parties, is working to finalize terms and expects to announce asset purchase agreement(s) in the near term. Businesses included in the Chapter 11 filings and related sale process are as follows:
- Allegiance and Orion Healthcorp, Inc., the Company's two revenue cycle management ("RCM") businesses;
- Integrated Physician Solutions ("IPS"), which contains both physician practice management and group purchasing capabilities; and
- the holding company for New York Network Management ("NYNM").
The NYNM independent practice association and management company that collectively provide contracting and credentialing services to independent New York physicians are not included in today's filings, although they will be included in the sale process.
All Constellation businesses are expected to operate as usual throughout the sale process, providing all of their current services to clients and maintaining appropriate staffing and supply levels.
"After evaluating a range of possible alternatives, Constellation has determined that our various business divisions will be better positioned for long-term growth and success under new ownership with the financial strength necessary to invest in their offerings and opportunities," said Interim Chief Executive Officer Timothy J. Dragelin. "Today's Chapter 11 filings are a critical first step in achieving this outcome because they allow us to preserve the value of our businesses while we evaluate potential buyers, provide access to debtor in possession financing, and help us to separate our profitable businesses from the significant debt and liabilities held at the parent Company level. We are taking decisive action today to give our businesses – and all the people who depend on them – the best possible future."
The cases are being heard in the U.S. Bankruptcy Court for the Eastern District of New York.
Steps Taken to Maintain Business Continuity
Constellation has secured a commitment for $7.5 million in debtor in possession ("DIP") financing from Bank of America to support its ongoing operations during the sale process. This additional financing, combined with normal, ongoing cashflows, will help to ensure the Company is able to meet its go-forward commitments to employees, clients, and suppliers while also maximizing its chances of successfully selling its remaining profitable operations.
The Company also has filed a series of motions with the Court that, when approved, will allow it to maintain its usual employee compensation and benefit programs, make payments for goods and services in the normal course, and otherwise operate its business as usual. These motions are typical of the Chapter 11 process and are generally granted in the first days of the case.
Constellation plans to complete the intended sale process under Section 363 of the U.S. Bankruptcy Code within roughly 90 days. Potential buyers will have the opportunity to submit offers to acquire assets associated with NYNM, Allegiance, Orion, and IPS individually or in combination with one another. All offers will be evaluated to ensure the highest and best acquisition agreement(s) are achieved for the benefit of Constellation's creditors, employees, clients, and other stakeholder groups.
"Our goal is to transition each of these businesses to financially stronger owners that are better able to realize the full potential of their strong teams, services, and capabilities," said Mr. Dragelin. "By completing the sales through the Chapter 11 process, we also are able to definitively address the debt and liabilities that have burdened these businesses in recent years to even better position them for long-term growth and success under the new ownership."
Historical Events Leading to Today's Filings
Constellation was founded as an acquirer of revenue and practice management services with a vision to offer a one-stop revenue optimization strategy for independent physicians across the U.S. The Company took on significant debt to pursue its acquisition strategy based on what it now knows to be fraudulent information and cannot service its current debt load based on the actual operations of the acquired businesses.
When the Board of Directors became aware that there were discrepancies in the Company's stated and actual earnings, it took immediate action, including removing a number of executives who participated in these activities and retaining outside legal and forensic accounting counsel to conduct an investigation of the matter. The legal filings submitted to the Court today outline the evidence of fraud uncovered through the ongoing investigation.
Additional information about Constellation's Chapter 11 cases can be found at http://dm.epiq11.com/constellationhealth. The Company also has established a helpline to ensure a prompt response to questions from suppliers and clients, which may be accessed at +1- 888-751-4998.
Constellation is advised in this matter by DLA Piper and FTI Consulting.
This press release (including information incorporated or deemed incorporated by reference herein) contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those involving future events and future results that are based on current expectations, estimates, forecasts, and projections as well as the current beliefs and assumptions of the Company's management. Words such as "guidance", "outlook", "believes", "expects", "appears", "may", "will", "should", "intend", "target", "projects", "estimates", "plans", "forecast", "is likely to", "anticipates", or the negative thereof or comparable terminology, are intended to identify such forward looking statements. Any statement that is not a historical fact and other estimates, projections, future trends and the outcome of events that have not yet occurred referenced in this press release, is a forward-looking statement. Forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore actual results may differ materially and adversely from those expressed in any forward-looking statements.
SOURCE Constellation Healthcare Technologies, Inc.