Montefiore acquires bankrupt hospital
Despite a last minute bid by a group of real estate investors to buy the assets of bankrupt New York Westchester Square Medical Center, a bankruptcy court Thursday morning confirmed Montefiore Medical Center as the new owner. An auction was held yesterday for the assets of the Bronx community hospital. Montefiore's $15.3 million bid, raised from an earlier offer of about $14 million, prevailed. The auction originally had been set for Jan. 17. But after an entity called WSMC Properties submitted a bid on Jan. 14—and then upped its offer on Jan. 21—the auction was rescheduled. The WSMC offer consisted of a $14.4 million cash purchase of the property, the hospital's interest in capital leases for equipment and machinery, all real estate tax refunds and tax credits related to the real estate, and the hospital's interest in the tenant leases. WSMC Properties wanted to lease the hospital's assets back to the institution so it could continue to operate. Its proposal differed sharply from the plan proposed by Montefiore, which intends to shut down inpatient services at the 140-bed hospital and reconfigure it as an outpatient surgical clinic with a primary and urgent care clinic. Montefiore plans to make job offers to hundreds of the hospital's unionized employees. The Bronx community hospital has been fighting for its life since a state commission mandated its closure—slated for December 2008 but delayed by a lawsuit and a bankruptcy filing six years ago. Now the clock is ticking on finalizing a deal. The hospital must close on a sale by Mar. 31 to avoid a "liquidity crisis" that could cause it to shutter for good. The hospital "no longer has the financial wherewithal to return the facility to financial stability," according to the sale proposal to Montefiore. WSMC did not propose assuming any of the hospital's liabilities other than the leases and the contracts related to its assets that it had specifically purchased. The bidder also wanted to enter into a debtor-in-possession loan agreement with the hospital that would allow the institution to use up to $1.1 million to pay certain claims of the 1199 SEIU United Healthcare Workers East, the New York State Nurses Association union funds and the hospital's medical malpractice insurer. The last-minute bid by WSMC Properties was the second threat to the carefully-cobbled deal with Montefiore. The deal has the support of state Department of Health officials and the broke hospital's largest creditor—1199 SEIU, the union representing many of its front-line health care workers. However, it was previously opposed by Westchester Square's board, which abruptly voted Nov. 8 to end talks with Montefiore. It told state officials it was negotiating with a hedge fund in order to keep the hospital open as an inpatient facility, according to court documents. The board later backed down after pressure from 1199 SEIU and the state.
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