Modivcare has won court approval of its Chapter 11 reorganization plan, positioning the company to exit bankruptcy in the coming weeks.
Judge Alfredo R. Pérez of the U.S. Bankruptcy Court for the Southern District of Texas confirmed the reorganization plan on Friday. Modivcare said that Pérez also supported the company’s judgment in its business valuation and said that unsecured creditors would receive a “significant recovery.”
The judge’s confirmation comes four months after Modivcare filed for bankruptcy to shed $1.1 billion in debt and was subsequently delisted from the Nasdaq.
“We engaged in this restructuring to build a stronger, more sustainable organization to meet the critical needs of our members and we are pleased to have reached this significant milestone,” Heath Sampson, CEO and president of Modivcare, said in a Friday statement. “We look forward to completing this process and continuing our commitment to providing excellent service to clients and their members for years to come.”
Denver-based Modivcare is a provider of personal home care, non-emergency medical transportation and in-home monitoring solutions. The company said that its service lines would continue to operate without interruption.
The judge’s decision is despite objections from unsecured creditors that Modivcare undervalued the company, as outlined in court documents.
The company reaffirmed Sampson’s expectation that it would emerge from bankruptcy by the end of 2025. The CEO previously told HHCN the bankruptcy filing was a “time to reset” and ensure that the company would emerge even stronger.
“It is also pre-arranged,” he said. “There’s not a lot of uncertainty around, ‘Who’s going to be our owners? What’s our future strategy?’ It really is just alignment to ensure that we have the right balance sheet, we have the right liquidity, and then therefore could invest and continue to improve and get better across all our services.”
The bankruptcy proceedings have added fuel to Maine politicians’ complaints regarding the company’s $750 million non-emergency medical transportation contract with the state.
“Modivcare is bankrupt, they’re being delisted by Nasdaq and local transportation providers are concerned that they won’t even be paid for rides they’ve already provided,” state Sen. Mike Tipping, D–Orono, said in an August statement. “Let’s take a moment to reconsider dismantling our local non-profit transportation infrastructure and handing them control over the lives of so many vulnerable Mainers.”
Sampson described lawmakers’ complaints as “political noise” and told HHCN he did not see any risk that the company would lose the contract.
