Hey, DVI, Where is the $50 Million?
DVI Files Chapter 11, Announces Resignation, Names New CEO
August 5th, Leasing News questioned DVI ability not to make its
interest payment, and according to insiders, would be filing
The company allegedly tried to sell its portfolio, but was turned down, and
due to the “talk” of “accounting irregularities” and “possible
bankruptcy,” the company in whole, or in part, was not a very
attractive catch, Leasing News was further told.
DVI, Inc. yesterday announced that it and two of its U.S. subsidiaries, DVI Financial Services and DVI Business Credit, have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code with the U.S.
Bankruptcy Court in the District of Delaware. DVI elected to file for
reorganization “...as a result of significant financial difficulties stemming
from an unsuccessful diversification strategy, unsuccessful integration of
business units, decreased profitability, concerns regarding near-term
liquidity requirements and the recent discovery of possible accounting
The Company also announced that a special committee of independent directors has been formed to investigate the possible “accounting irregularities.” Leasing
News is told by an informed source the dollar discrepancy could be
anywhere from $50 to $75 million dollars. There reportedly could
be other discrepancies.
DVI has retained Latham & Watkins as legal counsel and has appointed AlixPartners as crisis managers. AlixPartners is an internationally recognized firm with expertise in crisis management and turning around troubled companies,
and that certainly describes the once very healthy medical industry company.
“Our immediate goal is to stabilize the Company's financial situation and utilize the Chapter 11 process to enable us to operate the business as we work to sell the Company's assets," said Mark Toney, a principal at AlixPartners, who was named “acting” CEO.. "We strongly believe that DVI's considerable asset portfolio will be attractive to the market, and we have already had initial discussions with a number of parties that have expressed interest in the Company."
The Company said it is continuing to work toward obtaining Debtor-in-Possession financing, as well as generate cash from within the Company in order to sustain operations while trying to sell its assets.