“The company will go through an orderly wind-down in the next five to six months,” Jim Nickell, a spokesman for National Century Financial Enterprises Inc., told Reuters. “We will continue to lay off workers.”
Privately held National Century’s clients included some of the nation’s biggest health-care providers. When National Century shut off their funding, a number of the health providers had to turn to a US Bankruptcy Court for protection just as National Century itself had (See Troubled Health Financing Company Files for Bankruptcy ). Alvarez & Marsal, a turnaround specialist firm hired by the company to sort through its financial affairs, found a gaping hole in the funds that were supposed to support the National Century’s bonds — the key capital source for its operations.
This made it virtually impossible to raise new funds, Alvarez & Marsal’s David Coles said in a Friday Wall Street Journal interview. Coles was appointed National Century’s chief executive.
The Dublin, Ohio-based National Century lent to a hundred or so health-care providers in exchange for unpaid medical bills to be reimbursed by insurers and government programs like Medicare or Medicaid. Between January 2001 and October 2002, it advanced $1.1 billion to clients that it may never get back, Coles told the Journal.
To pay for its purchases of the unpaid bills, National Century sold bonds, called asset-backed securities. It has about $3.35 billion of these bonds outstanding. Once triple-A rated, these bonds were reduced to “junk” status by Moody’s Investors Service late last year.
With the exception of its headquarters, the company had shut all other offices. It now employs 70 people, many of who will be laid off over the next several months, Nickell said.