ZT Corporate, a Houston-based private equity firm formerly known as ZT Wealth, won its stalking-horse bid to acquire six freestanding emergency centers in the Houston area, operating under the Neighbors Emergency Center brand.
Founded in 1997, the firm owns and manages Altus Health, whose operations include a surgical hospital, cancer centers and three freestanding emergency centers, all in Texas.
Neighbors was founded in Pearland, Texas in 2008 and opened its first center in 2009. At its peak, the company operated 33 centers across three states. However, increased competition, too much corporate overhead and “less favorable insurance payor conditions” led to financial difficulties.
Despite turnaround efforts that closed 11 centers, Neighbors’ many entities collectively filed for Chapter 11 bankruptcy protection in the Southern District of Texas on July 12, 2018. No less than 49 Chapter 11 bankruptcy cases were included in the filing, as Neighbors operated many independent businesses such as Neighbors Practice Management, LLC, NHS Emergency Centers, LLC, Next Door Urgent Care, LLC, Neighbors GP, LLC and Neighbors Emergency Center.
Neighbors’ landlord, RMKS, was the largest unsecured debtor, being owed $2.6 million. Neighbors Practice Management, the physicians group, listed the greatest amount of assets, in the $1 million-to-$10 million range with liabilities of between $50,001 to $1 million.
Houlihan Lokey was hired in late 2017 to market the centers as either a whole-company package or broken up into various asset groups. ZT Corporate targeted the Houston-area facilities, and its entities, Altus Health Systems OPCO, LLC and Altus Health System Realty, LLC, were named the primary stalking horse bidders.
Bidding took place in early September, with ZT Corporate the winner with the highest (still undisclosed) bid. Despite filings entreating the judge to designate the “best” bidder that would keep the company intact, ZT won the self-described 30-hour bidding war.
In preparation for its bid, ZT divested its 51% stake in Altus Infusion in May 2018 to a “middle market private equity firm.” Financial terms were not disclosed.
.
