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. . for excess profit. MSI is asking for a 10.5-percent increase. It. will take about five years to get the company back on its feet. The large building on West 11th will have to be sold and a total restructuring will be necessary in e order for the company to survive. The board is legally responsible for the finances after filing bankruptcy: The letter to Mr. Henry indicated that MSI could wait for a decision until October 25 but this morning the attorneys told them they would need a decision today from the council. If it is not granted - today, they will petition the courts tomorrow to change from a Chapter 11 to a Chapter 1 bankruptcy. He distributed a letter to th~ council. . A. J. Giustina, 888 West Park, stated that he is chairman of the creditors' committee. He explained the difference between a Chapter 7 and Chapter 11 bankruptcy. The Chapter 11 bankruptcy allows reorganization of the company so the creditors will be in a better position to be repaid. If MSI cannot demonstrate that the creditors will be better off with continued operation of the company, they will opt fbr the Chapter 7 bankruptcy--liquidation. If the council expects MSI to operate at no profit, then the creditors will not be paid off and the creditors will request the Chapter 7 bankruptcy. A delay in decision will probably result in liquidation. If the current management cannot make a profit, it would have an effect on potential purchasers. Speaking against the temporary rate increase: John C. Bush, 2230 West Irwin Way, stated that he was before the council five months ago when he said that MSI was delivering excellent service in a timely manner at an exorbitant price. The quality of care has diminished since then, so he cannot support the rate increase. If the company continues, it may not be able to continue in the same manner in which .it was. He feels the request e should be denied and if they fold, they fold~ Ultimately, the people will win and it will be worthwhile in the end. Collin Mooney, 4022 North Clarey, said that he is currently under9oin9 certifica- tlon as an EMT 4 in Portland. The quality of MSI services has greatly decreased. The medical community is not supportive of MSI employees as they are not perceived to be well-qualified. He is against the temporary rate increase. 'Mr. Delay. asked what amount of extraordinary debt is expected to be paid off in five years. Mr. Short responded that all pre-filing debts would be paid off. It would not be through rate increases but through liquidation of rental and sales, sale of the building, and by major capital infusion. Mr. Short indicated that Mr. Leonard owns the building but agreed that $96,000 would be paid to the company from sale of the building. The rates being asked are to allow a profit- able operation. The company must have some reserve to replace equipment as needed. There is pressure to bring salaries to a higher level. Employees are being paid below median standard. The employees are giving some and the management is giving a lot. They expect 100 percent of the debt to be repaid. Mr. Delay asked about the amount of debt listed in the Chapter 11 bankruptcy. Mr. Short indicated that it would be the pre-filing debt--$430,000. Mr. Delay stated that the board recommends that if the company continues to operate at a negative cash flow, liquidation be pursued. He asked what action is being tak~ - MINUTES--Eugene City Council October 15, 1980 Page 6