ELYRIA, Ohio—Invacare Corporation has announced that has filed for Chapter 11 bankruptcy, saying the move would help the company move forward with less debt and invest in the future.
The company and two of its American subsidiaries have filed voluntary Chapter 11 cases in the U.S. Bankrupty Court for the Southern District of Texas. Its non-U.S.-based businesses are not included in the filings and Invacare "does not anticipate these filings to impact its ability to manufacture and deliver products to its customers globally," the company said in a news release.
The post-acute care medical device manufacturer has entered into a restructuring agreement with most of its debtors that could reduce Invacare's funded debt by approximately $240 million and provide the company with $60 million of equity capital to repay some debts and fund a transformation plan.
“The actions announced today mark a big step forward for Invacare," said president and CEO Geoff Purtill. "Having the full support of our secured term loan lender and a majority of our convertible noteholders will enable the prearranged filings to proceed efficiently. The company expects to emerge with significantly less debt on its balance sheet and will secure additional liquidity to support long-term growth."
The company expects to be financially positioned post-bankruptcy to capitalize on a significant upward shift in market demand. "The company intends to deliver improved profitability and free cash flow in 2023 and beyond, while building on its legacy as a leader and innovator in the lifestyle and mobility and seating markets," the release reads.
“Invacare has the right leadership, vision and the financial commitment from the sponsorship group to succeed, and we are confident that this Chapter 11 process will result in a comprehensive recapitalization transaction that will not only stabilize liquidity but also de-lever the balance sheet and better position Invacare for future growth,” said Steven Rosen, chief executive officer of Azurite Management, Invacare's largest shareholder.
The restructuring plan includes a $70 million debtor-in-possesion term loan that includes $35 million in new funding. The company said that funding, if given court approval, will allow Invacare to operate as normal during the restructuring. It has requested the authority to continuing paying employee wages and benefits uninterrupted, and to support its customer programs and product warranties.
"The company expects operations to continue and to pay its suppliers in the ordinary course of business for all authorized goods delivered and services rendered after the filing date," the company wrote.
In November, Invacare announced it was discontinuing the production of respiratory products to focus on its core categories of lifestyle and mobility and seating products. The company reported a year-over-year third quarter decline of 24% in net sales and an adjusted earnings before income, taxes and depreciation (EBITDA) loss of $11.8 million, down from a positive EBITDA of $8 million. At the time, Purtill said, "We will also continue to take a hard look at every aspect of our business, leaving no stone unturned as we position Invacare for the future."
