Diabetes Supply Company, Chronic Care Solutions, Files for Bankruptcy in Delaware
Introduction
CCS Medical Holdings ("CCS" or the "Debtor"), the parent of Chronic Care Solutions, KeyMed, TotalCare Wholesale, and other diabetes and chronic care suppliers, filed for bankruptcy on July 8, 2009. CCS filed its bankruptcy petition in the United States Bankruptcy Court for the District of Delaware. According to CCS's Declaration in Support of its First Day Pleadings (the "Declaration"), CCS provides testing and insulin pump supplies to diabetes patients. Besides diabetes equipment and supplies, CCS also sells urology, wound and respiratory care equipment.
Going into bankruptcy, CCS has 1,600 employees, most of whom work in CCS's call centers addressing the needs of the Debtor's 400,000 patient-customers. CCS's operations include patient enrollment, patient support, shipping and billing. Based in Clearwater, Florida, CCS operates distribution centers in Florida, Virgnia, California, Colorado, Georgia and Texas. Besides its distribution centers, CCS operates 37 offices in 17 states.
First Steps in Bankruptcy
Nine days after filing for bankruptcy, CCS filed its proposed disclosure statement and plan of reorganization. According to its Declaration, the terms of the CCS plan is "supported by over 70% in amount of the outstanding obligations under the First Lien Credit Agreement." Further, Debtors contend that the "purpose of the plan is to provide for the restructuring of the Debtors' liabilities in a manner designed to maximize recovery to all stakeholders and to enhance the financial viability of the Debtors upon emergence from chapter 11."
Conclusion
CCS's prepetition debt totals $519 million, $329 million of which arises from a first lien revolver and term loan originated in September of 2005. The company attributes its bankruptcy to lower than expected earnings that arose, in part, from reductions in Medicare reimbursement rates.
This bankruptcy proceeding is before the Honorable Christopher S. Sontchi.
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Jason Cornell is a bankruptcy attorney at the law firm Fox Rothschild LLP in Wilmington, Delaware. If you have questions regarding this, or any other Delaware bankruptcy proceeding, you may contact Jason at (302) 427-5512 or jcornell@foxrothschild.com.
