Alaska Urological Institute

341 MEETING OF CREDITORS

A 341 meeting is set for April 29 at 10 am.

The 341 meeting is conducted by the United States Trustee’s attorney and the Debtor’s representative – usually its CEO – is required to attend. Creditors are allowed to attend either themselves or through counsel and ask the Debtor’s representative questions about the Debtor’s finances and why the Debtor is in bankruptcy.

Due to COVID-19, the 341 meeting will be held by telephone. You are allowed to call in or you can hire an attorney who can call in for you and ask questions.

Some topics that should be addressed at the 341 meeting include:

1. How the Debtor intends to work with a patient care ombudsman, if one is appointed.
2. Whether physicians have agreed to accept lowered salaries as proposed.
3. The Debtor’s plans and success in paying taxes as they come due post-petition.

EXPLORE PAST OVERPAYMENT TO EMPLOYEES

The Debtor has indicated that a large part of the reason it filed for bankruptcy relates to past overpayment to physician-employees. Specifically, the Debtor claimed that it added specialty physicians that it had to overpay in order to attract them to work in Alaska. The Debtor hoped that the physicians would grow their practice to support their inflated salaries, but that did not always occur.

Bankruptcy law requires the Debtor to file detailed financial information, known as the “Schedules” and “Statement of Financial Affairs.” The Debtor’s deadline for filing these papers has not yet come, so we do not have the detailed breakdown of these overpayments.

Creditors should ask for certain information from the Debtor, including the pre-petition physician salaries and the proposed reductions in those salaries. Creditors will also need to explore the possibility of recouping some of the overpayments from the physicians. A Committee was appointed on April 13th, which will have all of these rights and more.

SIGNIFICANT INSIDER AND AFFILIATE ISSUES

In the brief time that has elapsed since the bankruptcy case was filed on March 25th, the Debtor has already revealed several significant issues related to affiliates and insiders that should be explored by creditors. A sample of these issues is below:

• Debtor is proposing to borrow $200,000 from its owners at 0% interest with repayment set for September 1st.
• An affiliated company owes the Debtor approximately $1,460,000. This is a significant portion of the Debtor’s secured debt and the repayment of this loan could substantially impact payments to unsecured creditors.
• In June 2019, the Debtor re-negotiated its agreement with the affiliated company and agreed to charge less rent and a smaller management fee. This occurred within one year of the bankruptcy filing and may be able to be attacked by creditors.