PORT ST. LUCIE, Fla. A company that used to be Port St. Lucie's largest private employer has filed for Chapter 11 bankruptcy protection. The filing comes less than two months after Liberty Medical Supply, Inc., announced it would lay off more than 200 of its 1200 employees from the Treasure Coast facility.
Frank Harvey, President and CEO, confirmed that the company filed for bankruptcy protection under Chapter 11 of the Federal Bankruptcy Code for the District of Delaware on February 15, 2013.
"It shouldn't have any effect on our day-to-day employees, or on our patients," Harvey said. "We're just taking a tool that's provided by the federal government to help us work through some of the things we do as a new company starting out."
Harvey said several unexpected events led to the bankruptcy filing, including a dispute with Liberty Medical's former parent company, Express Scripts, about tax liabilities, and the assertion of a significant liability for overpayment by the Center for Medicare and Medicaid Services.
"Some of the most successful businesses in the world have utilized this business tool of Chapter 11 to deal with some of the things faced short-term to come out more profitable on the back end," said Harvey. "They're tough decisions that you have to make. You never like to negatively impact an employee's life."
Bloomberg.com reports the company listed debts of as much as $500 million each.
When asked if the company could have done anything differently to prevent filing for bankruptcy, Harvey answered, "I don't think so, because when you look at the recoupment, the federal government is pulling back $3.2 million a month from us, and they will not even give us a court date. They could continue to do that for a long time, so this gives us the protection that we need to get those matters dealt with."
The Port St. Lucie facility serves as the core corporate headquarters for Liberty Medical Supply, Inc., which also employees several hundred workers in Salem, Virginia. The Port St. Lucie facility used to be the largest private employer in the city, with 2200 employees in 2011. Liberty Medical Supply human resources confirmed the Treasure Coast facility currently has 1200 permanent employees.
More than 200 Liberty Medical employees who were set to be laid off from the Port St. Lucie facility on February 16, 2013, were told on February 14 that their employment would be extended until March 2. The federal WARN Act requires companies that lay off hundreds of employees to give a 60-day notice. Liberty Medical notified the government of the layoffs on January 2, 2013, and the original set date for the layoffs was fewer than the 60 days required.
Harvey was asked if some employees new extension end date was simply to fulfill the governmental requirements. He said in response, "It had nothing to do with that. As a matter of fact, some employees are being let go today that were given the WARN notice back then. The reason we did that is because we haven't finalized the option agreement with Alere, and until we get that, we will continue to service those Medicare fee-for-service patients."
Liberty sold its Medicare diabetes business to Coral Springs-based Arriva Medical, under parent company Alere, in 2011. Harvey said Liberty and Arriva have not reached an agreement on the terms of that option deal, so employees who are working temporarily for Arriva are staying on in an as-needed basis.
"We ask for prayers for our employees, our patients and our business," said Harvey. "It's a very tough business economy right now, and there are forces larger than us at work that we know are going to help us be successful in the long term."
"We've had a chance to meet with all of our employees," he continued. "We want to assure all patients that it's business as usual. We are continuing on, and we look forward to helping them deal with diabetes, or whatever the situation is. We will continue to work with them."
Liberty Medical later released this statement on the filing:
On February 15, 2013, Liberty Medical (the "Company" or "Liberty") filed for bankruptcy protection under Chapter 11 of the Federal Bankruptcy Code for the District of Delaware in order to restructure the Company around its core business and better position the Company for future growth.
The case was filed as ATLS Acquisition, LLC, et al. (the ultimate parent) with all subsidiaries including: FGST Investments, Inc.; Polymedica Corporation; National Diabetic Medical Supply, LLC; Liberty Lane Development Company, Inc.; Liberty Healthcare Group, Inc.; Liberty Medical Supply, Inc.; Liberty Healthcare Pharmacy of Nevada; Liberty Lane Condominium Association, Inc.; and Liberty Marketplace, Inc filing petitions as well.
Although the Company has spent time implementing certain operational restructuring measures prior to the filing, the Company concluded that a bankruptcy filing was in the best
interest of all parties to maximize value and return to all creditors and stakeholders.
Frank A Harvey, RPh Chairman and Chief Executive Officer was quoted as saying: "Liberty continues to focus on our critical mission to positively impact the lives of our patients and to help each patient better manage their health. We are making the tough business decisions necessary to ensure that Liberty will continue to be here in the future for our patients, our employees, and our community."
Several unexpected events led the Company to file for Chapter 11 including a dispute with the Company's former parent regarding certain tax liabilities and the assertion of a significant liability for overpayment by the Center for Medicare and Medicaid Services ("CMS"). The Company filed Chapter 11 in order to have breathing room to implement its new business plan and to address and resolve these and other disputed claims.
The Company is confident that aggressive cost management and a focus on appropriate revenue generating businesses will allow Liberty to operate profitability upon emergence.
The First Day Motions and related bankruptcy filings can be seen on the public website at www.dm.epiq11.com\aal.