An Alabama-based hospice company has made the first bid to take over a bankrupt competitor with offices in Richmond.
Hospice Partners of America made a $5.5 million bid for the Virginia and Texas assets of Florida-based American Hospice Management Holdings LLC. Included in the deal is Hospice of Virginia’s 76-person office at 1700 Bayberry Court in Henrico.
American Hospice announced earlier this month it was entering Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington.
As part of the bankruptcy proceedings, American Hospice notified the Virginia Board of Workforce Development its four Hospice of Virginia offices could close, which would affect 115 workers. But if HPA’s bid is approved many of those workers could keep their jobs, according to HPA’s lawyer Dan Sparks of Christian and Small LLP in Alabama.
“HPA expects in the near term to retain all or nearly all of the employees of the Virginia and Texas entities that it hopes to purchase via its Stalking Horse offer,” Sparks said in an email.
If approved, the acquisition of American Hospice would mean a first time expansion into Virginia for HPA. The Alabama company operates in eleven markets across Oregon, Idaho, Texas, Kansas, and Missouri. HPA is six years old and serves over 550 patients.
American Hospice announced March 20 it was selling its operating units in seven states and was voluntarily entering Chapter 11 protection to help with the sale. The company filed its pettitions in the U.S. Bankruptcy Court for the District of Delaware in Wilimington.
In explaining American Hospice’s bankruptcy, CEO Scott Mohosky said in a prepared statement that the company has found itself “working under the burden of an increasingly challenging regulatory environment coupled with rapidly changing market conditions.
“We now face the undeniable reality that selling our operations to those with strong capital structures will prove a better outcome for all of our stakeholders,” he said.
With a bid made on American Hospices Virginia and Texas operations, the company is seeking additional bidders for its operations in Arizona, Florida, Georgia, New Jersey, and Oklahoma.
The auction for American Hospice’s assets is expected to occur April 25 in Atlanta, Georgia, according to Sparks.
American Hospice has been on the market since 2013, the same year the company agreed to a $12 million settlement of Medicare fraud claims, according to a Law360 report.