Key medical-industry player files Chapter 11 bankruptcy

In an episode of Aaron Sorkin’s “The West Wing,” Christian Slater’s Lieutenant Commander Jack Reese smashes an ashtray to prove a point.

“Five-hundred-dollar screwdrivers is why you didn’t vote for the president?” Slater was asked by Emily Procter’s Ainsley Hayes character.

“I work for the president; that’s a lot,” replied Slater.

“No, it’s not,” answered Slater.

“A $400 ashtray,” replied Procter.

That led Slater’s character to take a heavy wrench and smash the ashtray on his desk.

The ashtray, he explained, was from a nuclear submarine that was likely to be targeted by enemy torpedos.

“When you get hit with one, you’ve got enough problems without glass flying into the eyes of the navigator and the officer of the deck,” Slater said. “This was built to break into three dull pieces. We lead a slightly different life out there and it costs a little more money.”

The point Slater’s character was making was that every industry has unique needs that people on the outside may not understand. In most cases, the differences that need to be served aren’t as extreme as the ones on a nuclear submarine, but they are real.

Medical professionals, like the military, have their own specific needs. Those include what they’re wearing, down to their shoes.

One of the key companies that specializes in apparel and footwear for the medical industry, Careismatic, has filed for Chapter 11 bankruptcy protection.

Doctors and nurses have specialized apparel needs. Image source: Pixabay.

Careismatic fills a key product need

While Careismatic may not be a household name, the company plays an important role in the health-care industry.

“Since its inception, Careismatic Brands has been an innovator in the medical apparel and footwear space. With a growing portfolio of brands and products across the health and wellness spectrum. Just like the community we serve, we’re real people putting care above all else,” the company says on its website.

Beyond just making scrubs, which are practical, Careismatic also makes fashion-forward apparel for health-care workers. That may sound silly, but doctors and nurses often have to interact with the public, and both looking good and feeling good about their appearance can help with those interactions.

Careismatic has a variety of brands all focused on the unique needs of the medical field. Doctors and nurses who work in surgery, for example, may stand in one spot with very little movement for hours. Doing that requires footwear support different from what’s offered by Nike, Adidas, Reebok and other traditional footwear players.

Careismatic files for Chapter 11 bankruptcy

Being important, even essential, however, does not guarantee financial success. Careismatic Brands has amassed a large amount of debt and has voluntarily entered Chapter 11 bankruptcy proceedings

“Careismatic Brands, the world’s largest medical apparel provider, today announced that it has commenced a financial restructuring process and has entered into a Restructuring Support Agreement (‘RSA’) with its equity sponsor and an ad hoc group representing approximately 76% of its first lien lenders and 70% of its second lien lenders that will strengthen its balance sheet and position the business for the future,” the company said in a news release.

The company filed its Chapter 11 Bankruptcy petition in U.S. Bankruptcy Court for the District of New Jersey.

“Through the Chapter 11 process, CBI will reset its financial foundation by eliminating $833 million of prepetition debt and substantially reducing the Company’s interest expense burden, enabling it to advance its ongoing transformation efforts and better serve its customers at the highest levels,” the company added.

As part of the bankruptcy process, the company will receive $125 million debtor-in-possession financing from its prepetition first-lien lenders. Assuming the court signs off on the company’s petition and first-day motions, Careismatic will continue to operate as normal, paying workers and vendors.