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21st Century Bankruptcy Objection Filed

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Certain landlords; physicians, managers and related entities and administrative services agreement parties (collectively, the “Creditor Group”) filed with the U.S. Bankruptcy Court an objection to 21st Century Oncology Holdings’ Disclosure Statement related to Joint Chapter 11 Plan of Reorganization.

The Creditor Group argues, “The Disclosure Statement should not be approved because it does not provide information of a kind, and in sufficient detail, that would enable such a hypothetical investor to make an informed judgment about the Plan. The Debtors failed to disclose the required financial information with respect to the ramifications of the Plan, so that creditors and parties in interests can ‘arrive at an informed decision concerning the acceptance or rejection of a proposed plan,’ as required under applicable law. Indeed, the Disclosure Statement sidesteps many factors known to the Debtors that will bear upon the success or failure of the proposals contained in the Plan. First, the Disclosure Statement fails to disclose the substantial economic risk facing the Debtors without resolution of disputes with the Employees/Contractors, Practice Management Groups, and Landlords that comprise the Creditor Group….Second, pursuant to the Disclosure Statement at Section VII.E, unless expressly rejected by the Debtors, all leases and executory contracts will be assumed by the Debtors upon confirmation of the Plan. The Debtors should not be able to assume unidentified contracts.”

In addition, “In total, to assume all of the Creditor Group’s leases, there is in excess of $60,000,000 in cure obligations….Third, given the construct of the Plan treatment for unsecured creditors, it is impossible for any creditor to anticipate the level of distribution on any allowed amount of their claim that they would receive in either cash or stock, or how much any stock distribution may be diluted. Such a haze over the treatment of creditors is anathematic to the statutory mandate of disclosure sufficient to enable a hypothetical investor of the relevant class to make an informed judgment about the Plan. Finally, the Disclosure Statement should not be approved where the Plan itself is un-confirmable. The Debtors have not included any reliable revenue projections with their Disclosure Statement. Further, the Disclosure Statement does not even consider the possibility or consequences if certain of the Debtors’ key constituencies (within the Creditor Group) leave the Debtors when their contracts are rejected and/or indemnification denied, or if the leases at their practice location is rejected. Without these key constituencies, it will be impossible for the Debtors to service their post-confirmation indebtedness. Without projections that consider this outcome, there is no meaningful way to evaluate the Plan’s feasibility.”

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