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InSight Health's Northern California Imaging Centers to be Sold

InSight Health Services Holding Corp. asked the Southern District of New York bankruptcy court for authority to sell its interests in four Northern California imaging centers to SimonMed Imaging, Incorporated on Friday. Three of the imaging centers are wholly-owned by debtor entities and a debtor entity owns 70% of the limited liability company membership interests in the fourth facility. Overall, InSight Health and its affiliates own and operate a network of 62 fixed-site imaging centers and 104 mobile facilities in more than 30 states. The companies filed for bankruptcy protection in December 2010 with a prepackaged plan of reorganization that would eliminate almost $300 million in debt by converting the companies' senior secured notes to common equity.

Bankruptcy court documents report that InSight wants to sell the Northern California facilities because monthly EBITDA (earnings before interest, taxes, depreciation or amortization) decreased by 14% from July 2009 to September 2010 on average for these facilities. InSight began seeking alternatives for its NorCal operations in mid-2009 and had closed one facility and sold another facility in the area before the bankruptcy filing. Now the company is seeking to exit the NorCal market completely through the SimonMed sale.

According to court filings, InSight provided diligence to several potential purchasers and received four offers. The highest offer, which provided approximately $9 million in consideration, was for the purchase of the NorCal assets and two other facilities. However, that offer was withdrawn by the bidder after the parties could not agree on the terms of an asset purchase agreement. InSight therefore reengaged discussions with the remaining bidders and received two competing bids for just the Northern California facilities. The cash purchase price offered by SimonMed was approximately $600,000 more than the other bidder's offer and SimonMed's bid also provided for InSight to retain any accounts receivable owed on account
of services provided at the Northern California Centers prior to the sale closing date, which InSight asserts will total approximately $1 million. Therefore, InSight determined that SimonMed's bid was approximately $1.6 million higher and selected it as the winning bid.

In light of InSight's extensive marketing of the NorCal facilities already, the company is now asking the bankruptcy court to approve the sale without any further competitive process. A hearing is set on the motion for February 2, 2011. The deadline for parties to object to the motion is January 28, 2011 at 4:00 p.m. (Eastern).

You can read InSight Health's sale motion and proposed asset purchase agreement with SimonMed here:

Other important recent bankruptcy court filings in InSight's cases (click on the title of any document for more information or to purchase):
For access to all major pleadings filed in this case, please visit

Read more: Bankruptcy News & Analysis: InSight Health's Northern California Imaging Centers to be Sold