KKR-backed Envision Healthcare has filed for voluntary reorganisation under Chapter 11 of the US Bankruptcy Code.

The company has reached a comprehensive Restructuring Support Agreement (RSA) with its key stakeholders.

It signed the RSA for debt obligations of about $7.7bn.

As per the terms of the RSA, the AMSURG and Envision Physician Services businesses will be separately owned by some of their respective lenders. 

AMSURG will buy the surgery centres held by Envision for $300m in addition to a waiver of intercompany loans held by AMSURG, which handles ambulatory surgery centres. 

With the exception of a revolving credit facility for working capital, all of Envision’s debt will be equitised or cancelled, deleveraging about $5.6bn.

Subject to court approval, Envision will use cash collateral produced from ongoing operations to fund operating expenses, including supplier obligations and employee wages, salaries and benefits during the restructuring process.

According to the company, financial pressures, including the decline in patient volumes during the Covid-19 pandemic and challenges with health insurers, have contributed to the need for restructuring.

Envision stated that it remains committed to delivering outstanding patient care and has recruited a new management team to navigate financial pressures.

Envision has filed the voluntary petitions in the U.S. Bankruptcy Court for the Southern District of Texas.

PJT Partners is serving as the investment banker for Envision, Alvarez & Marsal as the financial advisor, and Kirkland & Ellis as the legal advisor.