Lake Forest-based InSight Health Services Holdings Corp., a provider of medical scanning services that is seeking to trade most of company’s shares for debt relief, now is taking its plan to bankruptcy court.
InSight, with yearly sales of $300 million, filed for bankruptcy reorganization Wednesday.
The company plans to press on with its plan to offer 90% of its common stock to creditors in exchange for $195 million in debt due in 2011.
InSight had been trying to sell debt holders on the plan outside bankruptcy court. The plan has the backing of more than two-thirds of its debt holders and all common stockholders, according to InSight.
It’s unclear whether the holdouts forced the company’s hand in filing for bankruptcy.
In March, Chief Executive Bret Jorgensen told the Business Journal that bankruptcy wasn’t “the path we’re on, but if we chose to, we could use that as a tool to force any holdouts to do the exchange.”
InSight said it doesn’t expect any interruption of its operations during the bankruptcy proceedings.
The company’s restructuring is “being accomplished through a prepackaged (bankruptcy) plan because of its efficiency,” Jorgensen said in a release. “We expect a quick confirmation of the plan, which preserves trade creditor claims and protects our customers and employees.”
To fund operations during restructuring, InSight is asking the bankruptcy court in Delaware to approve changes to its a $30 million loan with Bank of America, including a change in default provisions.
Private equity investors J.W. Childs Associates LP of Boston and Halifax Group LLC of Washington, D.C., now own InSight after taking the company private five years ago. J.W. Childs owns 80%, while Halifax owns 20%.
They’re set to own 10% of the company after restructuring.
