DOWNEY, Calif., March 7, 2012 (GLOBE NEWSWIRE) -- Downey Regional Medical Center (DRMC) announced that it has emerged from Chapter 11 reorganization proceedings through closing of its exit financing in a $52 million loan transaction. Under its exit financing, Downey Regional issued $32 million in new taxable bonds through the Independent Cities Financing Authority and entered into a $20 million A/R facility with Midcap Financial LLC.
On September 14, 2009, the hospital filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code citing financial systems breakdowns and poor contracts as its reasons for filing. Following substantial restructuring of its contracts and significant improvements to its financial systems, Downey Regional obtained final court approval of its Plan of Reorganization on February 16, 2012, with the exit financing closing earlier today.
"Downey Regional Medical Center's recovery is a success story almost without parallel. Hospitals don't usually survive bankruptcy intact, let alone unaffiliated, let alone during a severe national recession and an economy that did not support viable capital markets. We are especially proud that during our reorganization, we were able to continue normal business operations, including the emergency room and provide excellent patient care to our community," said Kenneth Strople, President and CEO of Downey Regional Medical Center.
"Emerging from bankruptcy protection was truly a collaborative effort and could not have been achieved without the strong leadership of the Hospital's administration, together with the dedication of the physicians, nurses and staff who serve the community. I want to sincerely thank everyone for all their support," added Strople
Hospital operations were improved during the Chapter 11 process; the Hospital purchased a new Cath Lab, new general chemistry machines and digital mammography technology, all while paying down over $17 million to creditors. Creditors will continue to receive payments while the hospital continues improving its financial performance over the next several years.
"With new health care contracts in place and our financial house in order, the hospital management team is very excited about the future, even as we face the uncertainty of the future and challenges in healthcare. We have transformed our hospital operations and have emerged as a stronger, healthier, and more competitive community health care provider. We are very proud of everything we have accomplished and are looking forward to making more exciting announcements in the near future," concluded Strople.
As it enters its 90th year of continuous operations, DRMC looks forward to continuing its service to the southeast Los Angeles County region. For more information on the hospital, please visit www.DRMCI.org