Hospital Operator Nu-Med Files Chapter 11
Nu-Med Inc., a hospital operator mired in debt, has filed for protection from its creditors under Chapter 11 of the federal bankruptcy laws.
The Encino-based company said “ongoing cash-flow problems,” and its default on debt-interest payments last October, led to the Chapter 11 filing. In its fiscal year ended April 30, 1992, Nu-Med also lost $37.6 million on revenue of $123.9 million.
Nu-Med said it already has proposed a reorganization plan based on agreements with the holders of about 42% of its outstanding debentures. The plan would preserve the rights of Nu-Med’s secured creditors while converting the claims of the debenture holders and other unsecured creditors into common stock.
The unsecured creditors would get 94% of Nu-Med’s common shares, while existing stockholders and Nu-Med’s management would own the rest.
Nu-Med said its operating assets after the reorganization would include three psychiatric hospitals and one acute-care hospital.
The company also said Foothill Capital Corp., a unit of Agoura Hills-based Foothill Group Inc., has agreed to provide a $2-million credit line to Nu-Med during the reorganization, subject to court approval.
