Quorum, which operates 23 hospitals across 13 states, filed for Chapter 11 bankruptcy in Delaware on April 7 and entered into a restructuring agreement. Mudrick Capital Management, which owns nearly 15 percent of Quorum’s shares, is now arguing that the restructuring agreement is “factually and legally stale” because of the grants available to Quorum through the Coronavirus Aid, Relief and Economic Security Act and the Paycheck Protection Program and Health Care Enhancement Act.
“Although the debtors were unaware of the full amount of the cash infusion coming their way, to date, none of that value is in the debtors’ valuation, none goes to equity, none of the underlying facts have been disclosed, and the debtors have yet to exercise their much-touted ‘fiduciary out,'” Mudrick’s attorneys wrote in an April 30 court filing, according to the Nashville Post. “It is plain that the debtors should terminate the [restructuring agreement] and withdraw the plan.”
According to the Nashville Post, Mudrick claims Quorum has received $19.2 million in federal aid and could receive at least another $127 million.
Mudrick filed a motion to continue the confirmation hearing, preliminary objections to confirmation of the restructuring plan, a motion for the appointment of an equity committee and an objection to further approval of the debtor-in-possession financing. A hearing on the motions is set for May 15.
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