Georgia proton center, with $550 million of muni debt, files bankruptcy

Bondholders face a substantial haircut after a long-distressed Georgia proton therapy center filed bankruptcy last Thursday.

With more than $550 million of outstanding senior and subordinate tax-exempt bond debt, the Georgia ProtonCare Center, Inc. is on track for a sale to Emory University for $110 million.

Emory is acting as a stalking horse bidder with support from the majority of senior bondholders as represented by bond trustee UMB Bank NA.

The Chapter 11, filed Jan. 22 in the U.S. Bankruptcy Court for the Northern District of Georgia, comes after years of struggle and defaulted bond payments from Georgia's only proton therapy cancer treatment center. The GPCC is one of several municipal bond-financed proton centers facing distress across the country.

"Although the debtor's facility is one of the busiest proton therapy centers in the United States, treating over 1,000 cancer patients annually, revenues received from patient treatment have been insufficient," newly hired chief restructuring officer Darryl Myers said in his first-day declaration.

Primary revenue sources of Medicare, Medicaid, commercial insurance and private pay "do not provide the debtor with sufficient income to service the debtor's significant debt obligations," Myers said.

Limited insurance coverage continues to hamper the sector, Steve Hicks, CEO of Provident Resources Group, Inc., which owns the GPCC, told The Bond Buyer in a previous interview.

Outstanding senior bonds total $310.5 million and the Series B and C subordinate bonds total just under $240 million. If Emory's $110 million stalking horse bid succeeds, it would cover roughly 20% of all outstanding bond debt. Assuming only the $310 million of senior bonds get repaid, as outlined by the indenture, it would mean a 65% haircut for senior holders.

The bonds rarely trade hands. A tranche of senior bonds with a 6.75% coupon due in 2035 most recently sold for 20 cents on Oct. 28, 2025.

Provident purchased the center in 2016 after an initial group of investors ran out of money and halted construction. The Atlanta Development Authority floated the unrated debt in 2017, and the center's doors opened in 2018.

Emory University already oversees and manages the facility.

Bondholders have a security interest in all of the center's assets and cash. During a Monday hearing, Judge Jeffery Cavender approved an interim cash collateral motion that allows the center to remain open despite the order being what he called "strongly in favor of the bondholders" as it, among other things, waives the debtor's right to challenge bond claims.

A fast-paced sale process proposes a 75-day marketing period, a stalking-horse hearing in early March and an auction, if needed, in mid-April. Cavender questioned the need for the "very aggressive timetable."

Emory and bondholders agreed on the need for an expedited timeline, UMB counsel Eric Blythe of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., told the judge.

Emory is "very interested in taking this project over as soon as possible," Blythe said. "There are hundreds of millions of bond debt owed and $110 million is not covering it," he added. "We are cognizant of maximizing the value of this project" while also avoiding too much "cash burn" during the bankruptcy, he said.

The timeline is "not outlandish" for the type of asset that's being sold, said debtor attorney David Gordon of Polsinelli PC.

"It's a proton therapy center ? there are only so many buyers," Gordon said, saying the U.S. has only 47 proton centers. "The universe of people who could buy it is limited."

The court will hold a hearing Feb. 3 on the bid procedures.

SOLIC Capital, acting as the investment banker, will market the center over the next few months.

Provident is owed $7.2 million in asset management fee payments, which have been subordinated under the master indenture, according to Meyers' statement. There is another $29 million owed to unsecured creditors like vendors, although it remains to be seen if an unsecured creditors committee will be formed.