Jessica Scouten, Director of Forensic Services and Senior Manager of Healthcare Consulting, coauthored an article in the American Health Law Association (AHLA) Business Law and Governance Practice Group Briefing. The article, “Why You Should Learn the Playbook: Know the Game Plan for Distressed Acquisitions and Divestitures,” presents a snapshot of recent healthcare distressed cases and an overview of distressed sales.
The article explains that in 2023, healthcare bankruptcies became the second most common industry to file for bankruptcy, contributing to a 13-year high in overall U.S. bankruptcies. A healthcare company in financial distress should understand the “playbook” of possible sale alternatives, such as through a bankruptcy or a receivership process.
The authors state:
“Distressed businesses are often compared to melting ice cubes or an aircraft in rapid descent. The goal in a distressed enterprise is to get to a transaction before the ice cube melts or the aircraft and ground meet. There are two drivers of time. One is the business’s cash flow…. If the business is in bankruptcy or receivership, the court-approval process will be the second driver of time.”
The authors also compare public and private sales, including the roles of debtors, receivers, creditors, and courts, and the advantages and disadvantages of each type of sale.
The AHLA Briefing article was published on Aug. 26. It is Part 1 of a three-part series on distressed healthcare transactions and is available to AHLA members. AHLA is the nation’s largest non-profit educational organization devoted to health law. PYA is proud to be a long-time supporter of the AHLA mission.
PYA provides financial advisory, transaction due diligence, and litigation support services for financially distressed healthcare organizations. If your organization is experiencing liquidity issues, our executives can provide strategic direction and operational insights to help you navigate and understand the options.
