Dental Clinic Firm Files for Reorganization
Trade creditors and shareholders would receive the equivalent of 10 cents on the dollar under a bankruptcy reorganization plan announced Monday by American Medi-Dent, the Orange County-based operator of 13 dental clinics throughout Southern California.
The proposal, filed in federal bankruptcy court in Santa Ana, calls for American Medi-Dent to be folded into a new corporation, according to Jeffrey P. Berg, the company’s attorney.
Dental Network Management of Torrance would own 90% of the stock in the new company and has agreed to pay $500,000 in cash and $1.5 million in loans for the stock.
Stock Offered
The existing 1,800 shareholders of American Medi-Dent, who now own all of the company, would receive the remaining 10% of the stock in the new operation.
The plan also proposes paying unsecured creditors, consisting primarily of the company’s trade suppliers, about $100,000 of the total $1 million owed them. The proposal further calls for Bank of America to restructure its $3.5-million loan.
The company, which operates American Dental Centers and Associated Dentists centers in Orange, Los Angeles and Riverside counties, filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in February after being hit by a string of malpractice suits. The company claimed assets of $10.3 million and liabilities of $9.3 million.
The reorganization plan, scheduled for bankruptcy court review Sept. 5, would permit the clinics to continue to operate.
If given tentative court approval, the plan would be submitted to creditors and shareholders for approval. Berg said the company expects approval by all parties involved by mid-October.
