Milbank LLP represented the Official Committee of Unsecured Creditors in the Chapter 11 cases of healthcare organization Verity Health System of California, Inc. (“Verity”) and its debtor-affiliates. Verity is a non-profit operator of six California hospitals and several affiliated clinics that serve low-income communities in Los Angeles and Northern California. The Los Angeles-based nonprofit healthcare system and 17 affiliates submitted Chapter 11 petitions and filed for bankruptcy protection to explore a sale of its hospitals on August 31, 2018 in the US Bankruptcy Court for the Central District of California in Los Angeles.
The health system’s bankruptcy filing followed a series of deals that left it saddled with more than $1 billion in pension liabilities and bond debt. This was one of the largest hospital bankruptcies in recent memory.
The Committee was a proponent of the Chapter 11 plan, which became effective on September 4, 2020 and provides for the distribution of proceeds from the sales of Verity’s six hospitals, as well as proceeds from other assets of the bankruptcy estate. Now that the plan is confirmed, a liquidating trustee will take over the task of administering remaining assets and making additional distributions to creditors. Milbank will serve as counsel to the liquidating trustee.
The Milbank team was led by Financial Restructuring partners Mark Shinderman and Gregory A. Bray, and included of counsel Dennis C. O’Donnell, and associate James C. Behrens.
