Carestream Health - Recapitalization Plan Confirmed
On September 28, 2022 Carestream Health issued a press release announcing a bankruptcy court had "confirmed" its "pre-packaged" bankruptcy plan. The key element is an agreed upon $470mn reduction in the medical imaging company's debt. A formal exit from bankruptcy will occur in a few days. We last wrote about the company just last month when Carestream filed for Chapter 11.
We don't know exactly how the two BDCs with exposure will fare in the "new" Carestream, but chances are high that some or all the $14mn in debt invested by Cion Investment (CION) and Portman Ridge (PTMN) will become a realized loss. There may also be some sort of debt for equity swap. We'll get the final details - and the impact on CION/PTMN in either the IIIQ or IVQ 2022 results. The amounts involved are not material for PTMN (portfolio AUM: $581mn). The CION position is larger, but held in one of its joint ventures.
The good news here for all the parties involved is the rapid way Carestream's troubles have been tackled and a new - presumably tenable - capital structure improved. This is a reminder to credit watchers out there that the bankruptcy system moves along at a lightning pace when the key players agree. This might prove a ray of sunshine in the months ahead if higher debt service costs cause a wave of restructurings.
Note: This is a corrected version of this article.