M*Modal, a major vendor of clinical documentation software for physicians, on March 20 filed for voluntary Chapter 11 bankruptcy protection.

The action was not unexpected; the Wall Street Journal reported on March 7 that the company, struggling with high debt and falling sales, was preparing to file within the next two weeks. M*Modal sells medical dictation/transcription services, as well as speech recognition, natural language processing and data analytics software that enables clinicians to include the context of patient narratives in electronic health records, according to the vendor.

One Equity Partners, an investment arm of JP Morgan, owns M*Modal after buying it for $1.1 billion in 2012. A year earlier, dictation/transcription firm MedQuist had bought speech recognition/natural language processing vendor M*Modal for $130 million to gain new technology. That sale followed MedQuist’s 2010 acquisition of bankrupt transcription vendor Spheris. In January 2012, before One Equity Partners bought the company, MedQuist--now comprising three vendors--changed its name to M*Modal to reflect unification of its services, which also includes coding.

In its bankruptcy filing, M*Modal gave a range of estimated assets and liabilities of $500 million to $1 billion each. The filing includes a list of its top 30 unsecured creditors, with Charlotte, N.C.-based US Bank NA owed nearly $266 million and next largest creditor owed $2.2 million.

M*Modal CEO Duncan James in a statement said, “When M*Modal was taken private in 2012, the acquisition was financed with a capital structure aligned with a specific set of assumptions that are no longer relevant. As a result, there is a need to restructure the Company’s balance sheet to better align with changing market dynamics and refinements to our strategy.” He added that operations will continue as normal during the bankruptcy proceedings.

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