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Law360 (August 3, 2020, 5:33 PM EDT ) Dental practice management company LT Smile and its Benevis subsidiaries filed for Chapter 11 protection in Texas on Sunday, citing the COVID-19 pandemic that caused them to close clinics across the country.
Georgia-based LT Smile, alongside Benevis Corp., Benevis LLC, Benevis Affiliates LLC and Benevis Informatics LLC, known collectively as Benevis, filed petitions indicating the companies have between 1,000 and 5,000 creditors and estimated both assets and liabilities at between $100 million and $500 million. Benevis told the court that after local government officials closed clinics in the 16 states where its clients operate, its revenue dropped by 68% for March, April and May of this year compared to those months in 2019.
In the 12 months prior to the COVID-19 closures, Benevis said it generated $360 million in net revenue and $25 million in earnings before interest, taxes, depreciation and amortization. Many of its client clinics have reopened since and have implemented new safety protocols in line with recommendations from the Centers for Disease Control and Prevention, Benevis' Chief Restructuring Officer Scott Mell told the court in a declaration.
"The debtors expect operations and patient volumes to return to pre-COVID-19 levels in the near term," he said. "General dentistry production for the month of July 2020 was approximately 80% of pre-COVID-19 levels."
U.S. Bankruptcy Judge Marvin Isgur entered an order Monday directing the joint administration of the three separately filed Chapter 11 cases "for procedural purposes only."
In a statement Monday, Benevis said the bankruptcy filing won't impact its dental care operations or its employees carrying out that work as none of the dental practices are part of the Chapter 11 filing. Benevis' chief clinical officer, Dr. Dale Mayfield, said in a news release that the reorganization process will allow the company to continue to "provide the highest quality dental services and care to millions of patients each year."
Scott Hornbuckle, Benevis' chief financial officer, echoed that sentiment in a statement, saying that the company has already secured additional financing from current lenders, including New Mountain Finance Corp. and affiliates.
"The additional financing and the reorganization process will help us strengthen our balance sheet and solidify our path to future success," Hornbuckle said. "We look forward to continued investments in the future and the continuation of our long history of supporting outstanding dental care."
Benevis provides business support services to more than 150 dental offices spanning 16 states, according to court documents, and those offices serve more than 2 million patients a year. In 2019, about 70% of its revenue was generated from Medicaid and the Children's Health Insurance Program.
Benevis did not file a reorganization plan with its petition. In a declaration, Mell told the court that the company has commitments for $30 million in debtor-in-possession financing from its lenders.
Benevis and LT Smile Corp. are represented by Veronica Ann Polnick and Matthew D. Cavenaugh of Jackson Walker LLP.
The case is In re: Benevis Corp., case number 4:20-bk-33918, in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.
--Editing by Jay Jackson Jr.
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