Healthcare

PSZJ has developed a national healthcare insolvency specialty practice, representing a variety of parties, including debtors, creditors’ committees, creditors, and asset purchasers, in chapter 9 and 11 bankruptcy proceedings and in out-of-court restructurings. PSZJ’s experience navigating the complex federal and state regulatory landscape in which healthcare providers operate allows our attorneys to guide clients through difficult restructuring and M&A transactions while ensuring optimal results for all constituencies—including patient populations.

Representative Cases

• Representation of creditors’ committee in chapter 11 case of Borrego Community Health Foundation in the Southern District of California. Served as restructuring counsel to the creditors’ committee of Borrego Community Health Foundation, a nonprofit federally qualified health center that provides culturally competent healthcare services to underserved communities in San Diego and Riverside Counties. Borrego filed for bankruptcy after numerous criminal investigations and a dispute with state regulators that threatened to precipitously shutter all of its locations. Through negotiations with the State of California and a successful going-concern sale of Borrego’s clinics, unsecured creditors are projected to receive a full recovery on account of their allowed claims.
• Representation of Watsonville Hospital Corporation in its chapter 11 case in the Northern District of California. Served as restructuring counsel to Watsonville Community Hospital, a 106-bed acute care facility serving patients in Santa Cruz and Monterey counties. The debtors sold the hospital as a going concern to a newly-created healthcare district, formed with widespread political support during the chapter 11 case, placing the hospital under public stewardship and ensuring continued access to medical care for a diverse and growing community.
• Representation of Verity Health System of California in its chapter 11 case in the Central District of California. Served as restructuring co-counsel to Verity Health System, one of the largest nonprofit healthcare providers in California that owned six acute-care hospitals in the Bay Area and Los Angeles. Through its chapter 11 case, Verity sold two of its Bay Area hospitals to the County of Santa Clara and the remaining facilities to private operators. In August 2020, Verity confirmed a plan of liquidation that restructured over $1.3 billion in bond and other funded debt and trade, employee, and pension obligations.