InSight Health Services files Chapter 11 Petition; Proposes Prepackaged Plan of Reorganization
On May 29, 2007, InSight Health Services Holdings Corp. (Case No. 07-10700) and InSight Health Services Corp. (Case No. 07-10701) filed voluntary petitions in the United States Bankruptcy Code for the District of Delaware for relief under Chapter 11 of the Bankruptcy Code. The debtors are proposing a prepackaged plan that effects a debt to equity swap to alleviate the burdens upon the debtors from extensive senior subordinated note debts.
According to the debtors’ declaration in support of their first day motions, the debtors are holding companies of non-debtor entities that operate a network of diagnostic imaging service centers at fixed and mobile locations in thirty states. The debtors’ non-debtor subsidiaries also enter into joint ventures with hospitals and radiology groups for outsourced diagnostic imaging services.
The debtors attribute the causes of their bankruptcies, in part, to the senior subordinated note debt; reduced reimbursements from third party payors, such as Medicare; increased competition; and rising salaries for technicians. Pursuant to the agreements underlying the prepackaged plan that the debtors will propose, the non-debtor subsidiaries will not file bankruptcy petitions.
These cases have been assigned to Judge Brendan Linehan Shannon. Judge Shannon has scheduled a joint disclosure statement and confirmation hearing for July 9, 2007.
