Mudrick Capital Management, L.P., has filed a motion to appoint an official committee of equity holders in the Chapter 11 cases of Quorum Health Corporation and its affiliates.
The company’s attorney, David Rosner, Esq., at Morris, Nichols, Arsht & Tunnell, LLP, said there is no estate fiduciary to represent shareholder interests as QHC’s Board of Directors and management “have abandoned those interests in favor of those of QHC’s noteholders.”
“Despite the Board owing fiduciary duties to the equity holders, Mudrick is not aware of any effort by the Board to protect value for equity,” Mr. Rosner said in court filings.
“In particular, even though members of the Board were all interested parties in the RSA negotiations given the plan releases, and no special committee or other independent party was established to evaluate whether the plan was in the best interests of the debtors’ equity holders,” Mr. Rosner said, referring to QHC’s restructuring support agreement (RSA) with certain lenders, including the senior noteholders who would become the owners of the reorganized company upon confirmation of QHC’s pre-packaged Chapter 11 plan.
As a result, certain protections for equity are “entirely absent” from the plan, according to the attorney.
Mudrick Capital is a beneficial owner of approximately 15 percent of the equity securities of Quorum, according to court filings.
Mudrick Capital is represented by:
Robert J. Dehney, Esq.
Joseph C. Barsalona II, Esq.
Morris, Nichols, Arsht & Tunnell, LLP
1201 North Market Street, 16th Floor
P.O. Box 1347
Wilmington, Delaware 19899-1347
Telephone: (302) 658-9200
Facsimile: (302) 658-3989
E-mail: firstname.lastname@example.org email@example.com
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David S. Rosner, Esq.
Howard W. Schub, Esq.
Matthew B. Stein, Esq.
Shai Schmidt, Esq.
Kasowitz Benson Torres LLP
New York, New York 10019
Telephone: (212) 506-1700
Facsimile: (212) 506-1800
About Quorum Health Corporation
Headquartered in Brentwood, Tennessee, Quorum Health (NYSE: QHC) — http://www.quorumhealth.com/ — is an operator of general acute care hospitals and outpatient services in the United States. Through its subsidiaries, the Company owns, leases or operates a diversified portfolio of 24 affiliated hospitals in rural and mid-sized markets located across 14 states with an aggregate of 1,995 licensed beds. The Company also operates Quorum Health Resources, LLC, a leading hospital management advisory and consulting services business.
Quorum Health incurred net losses attributable to the company of $200.25 million in 2018, $114.2 million in 2017, and $347.7 million in 2016.
As of Sept. 30, 2019, Quorum Health had $1.52 billion in total assets, $1.72 billion in total liabilities, $2.27 million in redeemable non-controlling interest, and a total deficit of $203.36 million.
On April 7, 2020, Quorum Health Corporation and 134 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10766) to seek confirmation of a pre-packaged plan.
McDermott Will & Emery LLP and Wachtell, Lipton, Rosen & Katz
are serving as the Company’s legal counsel, MTS Health Partners, L.P.
is serving as its financial advisor and Alvarez & Marsal North
America, LLC. is serving as restructuring advisor. Epiq Corporate
Restructuring, LLC, is the claims agent, maintaining the Web site