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Case
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Reference no. 200-024-1
Authors: John Sullivan (Boston University)
Published in: 2000
Length: 16 pages
Data source: Published sources

Abstract

During 1999, Genesis Health Ventures, a company first established in May of 1985 and dedicated to the service of the elderly population, had begun to experience financial difficulties. By March of 2000, Genesis had announced that it had begun discussions with lenders under its Senior Credit Agreement to revise the capital structure of the firm. By the end of June however, the financial performance of the company did not improve and Genesis Health Ventures filed voluntary petitions with the United States Bankruptcy Court in Delaware to re-organise its capital structure under Chapter 11 of the US Bankruptcy Code. Genesis quickly secured $250 million in debtor in possession financing for the future working capital needs. Management at the company believed that deep cuts in government reimbursements had severely impacted Genesis'' ability to service the company''s $1.5 billion debt. This case attempts to analyse two important issues. The first deals with the overall financial pressure of the United States health care system. The second addresses an individual company''s struggle within a competitive sector of the industry.
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Abstract

During 1999, Genesis Health Ventures, a company first established in May of 1985 and dedicated to the service of the elderly population, had begun to experience financial difficulties. By March of 2000, Genesis had announced that it had begun discussions with lenders under its Senior Credit Agreement to revise the capital structure of the firm. By the end of June however, the financial performance of the company did not improve and Genesis Health Ventures filed voluntary petitions with the United States Bankruptcy Court in Delaware to re-organise its capital structure under Chapter 11 of the US Bankruptcy Code. Genesis quickly secured $250 million in debtor in possession financing for the future working capital needs. Management at the company believed that deep cuts in government reimbursements had severely impacted Genesis'' ability to service the company''s $1.5 billion debt. This case attempts to analyse two important issues. The first deals with the overall financial pressure of the United States health care system. The second addresses an individual company''s struggle within a competitive sector of the industry.

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