(Reuters) -KKR & Co Inc-backed Envision Healthcare Corp is planning to file for Chapter 11 bankruptcy protection, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.
The filing, which could be made as soon as this weekend, would wipe out the investment of KKR in the medical staffing firm, the report said.
In 2018, KKR had taken Envision private in a deal valued at $5.57 billion to build up its healthcare portfolio. Including debt, the deal was valued at $9.9 billion.
The report said Envision has around $7 billion in outstanding debt, much of which trades at under 10 cents on the dollar as the company’s finances have steadily deteriorated over the last two years.
Most Envision debt will be swapped for shares in the reorganized company, the report added.
KKR and Envision declined to comment on the report.
The company has been impacted by high labor costs and has been in a long battle with UnitedHealth Group for the past few years with the insurer deciding in 2021 to not renew its longstanding partnership with Envision.
The staffing solutions provider said in a statement earlier this month that an independent arbitration panel had awarded it $91.3 million against UnitedHealth over underpaid claims.
The award concerns services that Envision provided to UnitedHealth members in 2017 and 2018.
(Reporting by Ananya Mariam Rajesh in BengaluruEditing by Vinay Dwivedi)