Rotech Healthcare filed voluntary petitions for reorganization under Chapter 11 of the U.S Bankruptcy Code as well as its plan of reorganization as the next step towards completing its debt reduction and restructuring announced on March 15, 2013. Once the plan, which is supported by Consenting Holders with a majority in outstanding principle amount of both Rotech's 10.75% First Lien Secured Notes and 10.5% Senior Second Lien Secured Notes, is confirmed, Rotech expects it will have eliminated approximately half of its secured debt.

The holder of Rotech's existing $23.5 million Term Loan, Silver Point Finance LLC, has agreed to provide debtor-in-possession (DIP) financing of up to $30 million. The DIP financing will be used for ordinary working capital purposes and to ensure normal operations during what is expected to be a brief Chapter 11 process.

"Today's actions will enable us to create a capital structure that will provide a foundation for sustained profitability and future growth," said Steven P. Alsene , president and chief executive officer. "This effort is being undertaken to fix our balance sheet and will not affect our operations. Given the support of our secured stakeholders, we expect the reorganization process to conclude quickly."

All of Rotech's debt was placed on the Company when it was spun off from its former parent company in 2002. As previously announced, the Consenting Holders support the debt reduction and restructuring plan. Certain of the Consenting Holders also constitute a majority of the holders of Rotech's existing $23.5 million Term Loan.  With widespread consensus among its key stakeholders, Rotech expects to receive plan confirmation and successfully complete the reorganization within 90 to 150 days.

Alsene said that neither Rotech's employees nor its patients will notice any difference in operations as a result of the filing. "Our patients will continue to receive the highest levels of patient care and service throughout this process,"  Alsene said.

During the Chapter 11 process, employees will continue to be paid as usual, subject to Bankruptcy Court approval.

The plan provides for full payment to trade creditors and vendors on the effective date for any pre-petition obligations, subject to Court approval and their entering into a Vendor Support Agreement to maintain or reinstate payment terms comparable to those that existed prior to the bankruptcy filing. As an added layer of protection, the Company has requested authority from the Court to pay pre-petition obligations in the ordinary course of business as those obligations come due for certain trade creditors and vendors who enter into a Vendor Support Agreement.

Subject to the terms and conditions of the plan of reorganization:

• The holders of Rotech's $23.5 million Term Loan and its $230 million of 10.75% First Lien Secured Notes will receive their pro rata share of an amended and restated term loan;
• The 10.5% Second Lien Secured Notes will be converted into 100% of the common equity of the reorganized Company, thereby eliminating in excess of $300 million of secured debt;
• Trade creditors and vendors who agree to maintain or reinstate payment terms that existed  prior to the bankruptcy filing will be paid in full; and
• All of the Company's outstanding shares will receive a distribution of 10 cents per share (provided that the total amount paid on account of such interests does not exceed $2.62 million).

The Company filed its voluntary petitions and plan of reorganization in the U.S. Bankruptcy Court for the District of Delaware in Wilmington.

Proskauer Rose, LLP serves as the Company's legal advisor, Barclays as financial advisor and AlixPartners as restructuring advisor.

Wachtell Lipton Rosen & Katz serves as legal advisor to each of the Consenting Noteholders holding Second Lien Secured Notes.