The DOJ declined to comment. Steward and UnitedHealth did not respond to requests for comment. The Boston Globe first reported on Optum walking away, while 9fin is exclusively reporting the reason.

This potential sale of the physician group to Optum was the anchor holding Steward’s entire bankruptcy plan together — without the sale and consequently any path toward a bankruptcy exit, it may be difficult for the debtors to obtain financing long enough to keep operations going.

Each step of the process both pre-and-post-petition, was structured around this potential sale. Prior to filing, Steward secured prepetition emergency financing from landlord Medical Properties Trust (MPT) and an expensive bridge loan from its ABL and FILO lenders (discussed here) with the specific intent to give the debtors the runway to negotiate and execute an LOI with Optum so they could declare bankruptcy with milestones in place and at least one potential path forward. 

Similarly, the company secured a DIP loan first from MPT, and later its FILO lenders to stabilize operations while it finalized a stalking horse agreement with Optum.

Although a specific dollar amount was never made public, having the deal or at least the potential of a deal in place was enough to placate lenders into cooperating and supplying additional funding.

Importantly, as part of the the $225m of new money financing provided by the FILO lender DIP — although $75m has already been dispersed — $150m is contingent on the debtors meeting a milestone which requires “[e]ntry into binding asset purchase agreement for Stewardship business by no later than July 31, 2024.” With Optum dropping its bid, this milestone will not be met.