Found this on Yahoo....sounds like there may be a bit of hope here!
FPA in bankruptcy court
Managed-care firm proposes reorganization
By Craig D. Rose
STAFF WRITER
July 21, 1998.......PT2
Bankruptcy attorneys unconnected with FPA, however, said such plans can be delayed or derailed by litigation.
"It will probably take at least three to four months for a petition like this," said John Smaha, a San Diego lawyer who specializes in business reorganization.
Committees probably will be appointed to represent bondholders and shareholders in the case, he added.
No matter what the timing, the bankruptcy filing continues a dramatic chain of events for a company that rocketed from revenues of $18 million in 1994 to more than $1 billion last year. FPA functioned typically as a subcontractor to large HMOs, accepting fixed payments in exchange for providing all medical care.
At its peak, the company was overseeing care for 1.4 million people through a network of about 7,700 doctors.
But in recent weeks FPA's meteoric rise has been matched by a steep fall.
In early May, FPA said it was running out of cash, was losing money on contracts and had overpaid for its acquisitions. That came just seven weeks after Dr. Seth Flam, who had guided the company since its public offering, resigned with a declaration that the company was poised for strong growth this year. Flam departed with a severance package valued at $4.8 million.
More than a dozen shareholder lawsuits quickly followed, at least one of which included allegations of $90 million in insider trading at the company.
Despite raising $25 million this month, FPA last week missed the final deadline on making a $2.6 million interest payment. The company closed its offices in Texas, where it had provided care to 130,000 patients, then saw its contracts with PacifiCare canceled, under which it provided care to 200,000 people.
Also last week, the company announced that Dr. Sol Lizerbram, a co-founder of the company, had resigned as chairman but was remaining with FPA as a director and consultant.
During its peak years, Flam, Lizerbram and at least four other FPA executives received annual compensation of $1 million or more, in addition to stock options. Neither Flam nor Lizerbram has responded in recent weeks to telephone messages.
In its bankruptcy filing, FPA proposes issuing 40 million new shares. Half would be distributed to the company's bankers -- who are the senior or first-in-line creditors.
About 3 percent of the new shares, according to the company plan, would go to bondholders, who would also receive warrants, which are options to purchase shares at a fixed price.
FPA further proposed making 8 percent of its new shares available through stock options to the management of the company, which FPA said would provide "incentives to return the company to profitability and maximize stakeholder value."
The company also proposed to consolidate its corporate offices in Miami, where Dresnick is based. FPA's founders began the company in San Diego and have had its headquarters on Nobel Drive off Interstate 5, as well as an operations center near Texas Street in Mission Valley.
For Gordon, meanwhile, FPA's problems have brought him full circle.
"I joined FPA because I felt a tidal wave of managed care would sweep the nation and it was difficult to cope as a solo practitioner," said Gordon, who sold his practice to FPA for cash and received company stock as part of its bonus program for salaried doctors.
"I'm afraid I have to go back to solo practice."
FPAM: Quote | Profile | Research This Is a Reply to: Msg 12093 by Clarence_Perkins
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