AHP wins court appeal
BRENTWOOD, Tenn. - American HomePatient closed the final chapter on its bankruptcy proceedings last month, when a U.S. Supreme Court judge denied a request by some of its debt holders to convert the money they had lost into shares in the re-emerged company.
"This is good news for AHP," said Schuyler Hoss, a healthcare consultant who follows the company closely. "It takes away the last cloud of potential trouble."
AHP worried that if the debt holders succeeded in appealing the decisions of several lower courts, the company's stocks and ownership would be diluted. The debt holders wanted to buy about 3.2 million shares of the company's stock for 1 cent per share.
The possibility of that happening affected the company's existing and possible investors, Hoss said.
"Organizations like Highland Capital Management--they had concerns about this," said Hoss, president of Northwest Healthcare Management in Vancouver, Wash. "They didn't want their shares diluted, and they didn't want another party to deal with."
The Dallas-based Highland Capital now owns about 80% of AHP's debt and nearly 10% of its stocks.
The debt holders had argued to the courts that they had lost their shirts during AHP's bankruptcy proceedings. While he acknowledged "they did lose out," Hoss said "that's what happens in bankruptcy."
AHP filed for bankruptcy July 31, 2002. It re-emerged July 1, 2003, under a restructuring plan that preserved its current management, restructured its long-term debt and ensured creditors and vendors they would be paid.