A U.S. Bankruptcy Court judge approved the sale of six Steward Health Care hospitals in Massachusetts Wednesday, though he left some of the exact details of the deals to be resolved before the end of the month.
Judge Christopher Lopez made the decision after hearing arguments Wednesday morning, including around an objection that key lenders to the bankrupt company filed to the proposed sales. The judge said he would approve the sales, though he wanted Steward and the lenders to iron out differences around how a certain $17 million in proceeds is divvied up.
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"This sale needs to happen, and it will happen," Lopez said from the bench in Houston, Texas. He added, "What I am saying is you're going to be authorized to sell it, but I'm going to withhold $17 million bucks, which is the short funding shortfall."
The judge said his decision to hold aside some of the sale proceeds to still be allocated "should not hold up these sales" and that he would have a ruling well before the targeted transaction close date of Sept. 30.
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Approved was Steward's plan to sell St. Anne's Hospital in Fall River and Morton Hospital in Taunton to Lifespan for $175 million; the Holy Family Hospital facilities in Methuen and Haverhill to Lawrence General Hospital for $28 million, and Good Samaritan Medical Center and St. Elizabeth's Medical Center to Boston Medical Center for as much as $140 million. Steward closed its other two hospitals here, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, on Saturday.
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Wednesday's hearing got into the meat of an objection filed by the "first in, last out" or FILO lenders that have pumped hundreds of millions of dollars into Steward as the company headed for bankruptcy. Those lenders said they "cannot possibly consent to the proposed sales of the Massachusetts Hospitals in their current form, and they do not." It was their arguments that swayed Lopez to require a resolution of the $17 million issue.
"The Debtors’ sale process has resulted in bids for the Massachusetts Hospitals for an aggregate purchase price of $343 million, subject to certain adjustments ... However, this figure is misleading as the entirety of the Purchase Price will be allocated towards the real property and therefore flow to benefit the purported landlord (MPT and Macquarie) and more specifically will flow to the purported landlord’s secured lender," the FILO lenders wrote in the objection.
