A Bankruptcy Court has approved the acquisition of the assets of bankrupt LCI Holdco LLC, the parent of LifeCare Holdings Inc, by Hospital Acquisition LLC, LCI Holdco said in a statement on Thursday.
The U.S. Internal Revenue Service had argued that the sale should be blocked because it would generate a big capital gains tax burden and leave LCI Holding Company Inc, based in Plano, Texas, without cash to pay it.
LCI, struggling with $484 million in debt, filed for bankruptcy on December 11. The company hired the Rothschild investment bank to sell its assets and LCI's lenders were the only bidders for the facilities, which have a total of 1,400 beds spread over 10 states. (link.reuters.com/cej27t)
The lenders, who are owed $353 million, proposed swapping most of their debt and taking on some of LifeCare's obligations in return for ownership.
The company was founded in 1992 and was acquired by Carlyle Group LP in August 2005 for $570 million.
The U.S. Bankruptcy Court for the District of Delaware also approved an interim management agreement between Complex Care Hospital of Idaho (CCHI), a wholly owned LCI unit, and Vibra Hospital of Boise LLC, an affiliate of Vibra Healthcare LLC.
The latter operates long-term acute care hospitals and inpatient rehabilitation hospitals.
The Court also scheduled a hearing for May 7 to consider the proposed sale of substantially all of CCHI's assets to the Vibra affiliate.
The case is LCI Holding Company Inc, U.S. Bankruptcy Court, District of Delaware, No. 12-13319.
(Reporting by Aditi Shrivastava in Bangalore; Editing by Paul Tait)