Quorum Health's attempt to expedite its bankruptcy plan during the COVID-19 pandemic will prevent shareholders from thoroughly analyzing their treatment under the hospital operator's restructuring plan, an equity investor argued in an April 9 court filing.
Brentwood, Tenn.-based Quorum, which operates 23 hospitals across 13 states, filed for Chapter 11 bankruptcy in Delaware on April 7. The for-profit company asked the court to expedite approval of its restructuring plan.
Mudrick Capital Management, which owns roughly 15 percent of Quorum's shares, objected to the accelerated timeline on April 9.
"The debtors and their noteholders' attempt to rush to confirmation using a temporary pandemic-related earnings trough to drive an opportunistic false valuation is unreasonable and without justification. There are no exigent circumstances requiring that the debtors fast-track their reorganization," Mudrick argues in court documents. "The ineluctable conclusion is that the debtors have agreed to file their Chapter 11 cases and proceed with the plan on an unnecessarily expedited basis at a logistically difficult time for the entire world in order to rush through confirmation without any meaningful analysis of the debtors' actual value and the destruction of shareholder value."
Mudrick asked the bankruptcy court to reject Quorum's request for an expedited confirmation schedule to allow more time to evaluate the restructuring plan and the underlying valuation it is based upon. The plan would pay unsecured creditors in full but provides no payout for shareholders that do not also own senior notes.
Mudrick also sent a letter to the U.S. Trustee requesting that it appoint an equity committee in the bankruptcy case.
On April 9, U.S. Bankruptcy Judge Karen B. Owens tentatively approved a May 22 confirmation for Quorum. The judge said the time frame could be extended if the U.S. Trustee forms a committee for equity holders, according to Law360.
Quorum announced March 31 that it is delaying its annual report for 2019. The company has also stopped trading on the New York Stock Exchange, according to the Nashville Business Journal. Shares of Quorum halted trading on April 7 at 30 cents per share.