Connections Community Support Programs, Inc.

Client Profile

Founded in 1985, Connections is a Delaware-based 501(c)3 not for profit provider of substance use and mental health treatment programs and services for adults and children at various levels along the continuum of care, including long and short term residential programs, community and home based programs, outpatient programs, medication assisted treatment programs, peer support programs, recovery residences and telehealth services.  Connections is one of Delaware’s largest nonprofits and is the contract provider of behavioral healthcare services for Delaware’s multiple government agencies.  Through its 1,000+ employees, 100+ locations and 20+ programs, Connections provides fulltime access to quality health care and treatment for approximately 10,000 lower income and/or at risk residents of Delaware.

Situation

Following year over year revenue and net asset growth, Connections experienced numerous challenges in calendar year 2020 that created a strain on performance and liquidity.  This included the loss of one of its largest contracts resulting in a significant decline in revenue and cash flow.  Without the benefit of consistent payments from this contract, it became apparent that Connections was not sufficiently staffed to manage the billing and collection of its remaining high volume, low margin receivables.  These challenges were exacerbated by the COVID-19 pandemic as government mandates restricted its ability to provide in person treatments, which made up a significant portion of services.  In response, management developed a comprehensive strategic plan to stem losses and address the legacy issues, but significant additional funding was necessary to implement a turnaround plan and no such funding was available.

Solution

SSG was retained in February 2021 to solicit interest from potential strategic partners capable of supporting the business long term and ensuring continued operation of all of Connections’ programs and all patient services without interruption.  After conducting a comprehensive pre-petition marketing process that attracted interest from numerous strategic parties, Connections filed for bankruptcy protection in April 2021 to obtain access to cash collateral to fund operations and to effectuate a sale transaction.  Inperium was designated as the stalking horse bidder and ultimately selected as the winning bidder for substantially all of Connections’ assets and programs following a remarketing process and auction.  The winning Inperium bid provided for the continuation of all programs and services for all patients, saved hundreds of jobs, paid all outstanding mortgage debt in full on 33 properties being acquired (which real estate was critical to the continued uninterrupted care of Connections’ patients), left behind all accounts receivable for the estate and provided for a closing within an aggressive timeline driven by the liquidity position.  SSG’s extensive Chapter 11 transaction expertise and significant healthcare experience produced a successful outcome that maximized value in a highly expedited, complex process involving multiple stakeholders and, most importantly, ensured continued critical care for thousands of vulnerable Delaware residents.