Modivcare files for Chapter 11 bankruptcy with $100 million financing

Modivcare Inc. (NASDAQ: MODV) filed for voluntary Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas to implement a comprehensive restructuring transaction, according to a company statement.

The healthcare services company secured support from more than 90% of First Lien Lenders and more than 70% of Second Lien Lenders through a Restructuring Support Agreement. These lenders committed $100 million in debtor-in-possession financing to support operations during the bankruptcy process.

The restructuring will reduce Modivcare's total outstanding funded debt obligations by approximately $1.1 billion, representing more than 85% of its outstanding funded debt. Upon closing of the financing, the company will have liquidity exceeding $100 million.

"This recapitalization strengthens our balance sheet and allows Modivcare to accelerate our investment in innovation by combining technology and data with high-touch member engagement," said Heath Sampson, Chief Executive Officer and President.

The company stated that all service lines will continue operating without interruption, with no expected impact on clients, members, employees or transportation providers. Modivcare provides non-emergency medical transportation, personal care services and remote patient monitoring solutions.

The company filed customary motions to meet obligations to clients and vendors, including transportation providers, and to continue paying employee wages and benefits. Modivcare intends to exit the restructuring process in early fourth quarter 2025.

The restructuring will transition ownership to a group of investors committed to the company's operations. Modivcare is advised by Latham & Watkins LLP, Hunton Andrews Kurth LLP, Moelis & Company LLC, and FTI Consulting.

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