Rennova Health Inc (RNVA)

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http://hive105.com/Hive%20105%20News/2016-12/2016-12-23_Bankruptcy_Court_Approves_Sale_of_Local_Hospital_to_Florida-Based_Rennova_Health.htm

Bankruptcy Court Approves Sale of Local Hospital to Florida-Based Rennova Health

Jackson, MS (2016-12-23) Scott County residents received an early Christmas present Friday, when a federal bankruptcy judge cleared the sale of the former Pioneer Community Hospital of Scott to Florida-based Rennova Health. The facility could reopen as soon as April 2017.
On Friday morning, US Bankruptcy Court Judge Neil P. Olack of the Southern District of the Mississippi signed the order that authorized the sale of all local assets of Pioneer Health Services of Oneida, LLC to Rennova Health, Inc. of Florida, a diversified company that provides lab services to other healthcare institutions, along with medical billing and record management software solutions. While the company has a long history in the medical industry, it doesn’t own any other hospital, nor has it ever operated one.
Per the order, the bankruptcy court authorized the sale in spite of several objections by creditors of Pioneer Health Services, Inc. of Magee, MS, which filed for Chapter 11 Bankruptcy in late March of 2016. In the asset purchase agreement between Rennova Health and the Pioneer Heath Services, Rennova has agreed to pay up to $450,000 of current liabilities on the local facility, which is largely debt owed to First National Bank of Oneida, which gave Pioneer Health Services a loan in 2015 to make renovations and repair structural problems with the aging facility. The assumption of the First National debt is being handled outside the purview of the bankruptcy proceedings because the loan was made to a subsidiary of Pioneer Health Services, which was not included in bankruptcy filing. Since First National Bank holds a Deed of Trust on the real estate, the debt must be satisfied and the lien released before the rest of the transaction can be completed.
In addition to the First National lien, Pioneer Health also owes the Internal Revenue Service more than $500,000 in back taxes. While the lien was against the hospital operations, and not against the real estate, the parties have agreed that the IRS will not interfere with the sale of the facility, provided proceeds from the sale will be subject to the same encumbrances—namely the $600,000 in cash Rennova has agreed to pay to consummate the transaction.
In addition to those monetary considerations, Rennova has also agreed to satisfy other debts and assume other obligations to complete the transaction.
While the court has cleared the way for the sale of the facility, the transaction isn’t expected to be complete until January 6, 2017. If the transaction is consummated, it could reopen as early as April; however, there are many regulatory compliance issues that must be met. At the behest of the state, the facility’s operating license has been in an inactive status, which will make getting state approval easier. Many departments of the hospital will also have to pass state inspections.
One of the most difficult challenges ahead for financial viability of the facility is getting a new CMS number, which is required for billing Medicaid and Medicare patients, which in the past account for more than 85% of the facility’s revenue. When Pioneer Health Services reopened the facility in 2013, it took nearly six months for the company to get the necessary federal approvals to begin billing those patients—a delay that cost the struggling company hundreds of thousands of dollars in revenues.
Tony Taylor, who was the CEO of Pioneer Community Hospital of Scott has reportedly been offered his old job back by the new company, and is going to lead the team trying to reopen the facility.