Bankrupt provider secures $2 million
GLENDALE, Calif. - When Continental Home Healthcare announced March 22 that it secured a $2 million line of credit from Sunrise Medical and Invacare, it borrowed both money and time.
"Continental needs time to fix their problems, and the best way for (Sunrise and Invacare) to help them is to give them that time," one source said. "Sunrise and Invacare are as motivated as anyone to see Continental back on its feet. They want them paying their bills."
A bankruptcy court cleared the way for Sunrise and Invacare to extend up to $1 million each. The West Coast-based provider plans to use the credit to purchase equipment and fill the backlog of sales created by its cash restraints.
While "debtor in possession" financing is common, Continental's "seven-figure borrowing is unusual," one source said.
The circumstances of Continental's financial woes are uncertain, but most bankruptcies are the result of an inability "to keep control of receivables and match them with debt," one source said.
Continental has already made several moves to improve its situation, particularly cash flow, according to a company release. Since June 2005, it has closed two branches and reduced the number of administrative personnel by more than 15%.
Attempts to reach Thornton were unsuccessful.