🚁New Chapter 11 Bankruptcy Filing - Air Methods Corp.🚁
Provider of Air Medical Emergency Services Files Prepackaged Bankruptcy
On October 24, 2023 Air Methods Corp. and 15 affiliates filed for chapter 11 in the Southern District of Texas (Judge Isgur).
Air Methods is the market-leading provider of air medical emergency services in the United States.
Per the debtors’ first day declaration:
“Air Methods currently faces a combination of unforeseen and uncontrollable factors impacting performance. These include labor shortages, increased costs, payor reimbursements challenges, and severe weather.”
“Although the Debtors’ business is operationally sound, the Debtors have substantial long-term funded debt that must be restructured prior to upcoming maturities. Simply put, the Debtors require deleveraging and additional capital, as they no longer can support their existing capital structure.”
Those payor “reimbursement challenges” relate to the No Surprise Act (“NSA”) which went into effect in January ‘22. The NSA introduced a new way to resolve disputed claims through the NSA’s Independent Resolution Process (“IDR”). While Air Methods resolved most claims with favorable rulings through the IDR, it took a much longer time, hampering cash flows and, in turn, debt servicing capabilities.
How much debt service are we talking about? Here’s what the pre-petition capital structure looks like: