Steward sale hearing today as objections pile up over hospital deals

After months of delay, Steward Health Care is set to appear before a federal bankruptcy judge today to seek approval for the sale of some Massachusetts properties, even as objections pile up.

The company has delayed the hearing more than a half-dozen times as it worked to secure bids on the eight hospitals it was operating in the Bay State. Six of the facilities eventually received bids, and four of them are due to be finalized on Wednesday. A further pair closed last weekend amid protests by community members and employees.

Lawyers representing some of the company’s lenders, however, are asking a judge to prevent the sale from going forward. According to their math, Steward is trying to sell its “operations, equipment, fixtures, furniture, and operations for zero monetary consideration.”

“Rather than deliver fair — or any — value to the Debtors, every penny of the sales proceeds will be allocated to the real property for the benefit of the purported landlord’s secured creditor,” lawyers for Steward’s “first in, last out debtor-in-possession” lenders told the court.

Those lenders, their lawyers write, “cannot possibly consent to the proposed sales of the Massachusetts Hospitals in their current form, and they do not.”

The Archdiocese of Boston, which used to operate several of Steward’s Massachusetts interests under the Caritas Christi label, said they object to the idea that those facilities might not continue in their “Catholic identity” as required by the deal that sold the hospitals in the first place.

“The goal of the Agreement was to ensure that the Caritas Hospitals continued to maintain their Catholic identity and to operate as Catholic health care facilities in accordance with Catholic norms,” their lawyers wrote. “Based on the Debtors’ sale papers, however, it appears that the Massachusetts Hospitals will no longer be operated as Catholic hospitals in accordance with the (Roman Catholic Archbishop of Boston) Agreement.”

The church objects, they say, insofar as Steward seeks “to transfer the Restricted Names or the Religious Items or authorize the buyers to continue to use symbols of Catholic identity.”

Steward filed for Chapter 11 bankruptcy protections in May, after it became clear the company would not be able to meet $9 billion in debt obligations going forward.

Their plan to sell their hospital properties has thrown the Massachusetts healthcare system for a loop, been met with widespread protests, and resulted in the closure of Dorchester’s Carney Hospital and Ayer’s Nashoba Valley Medical Center.

Rhode Island-based Lifespan bid for Morton Hospital and Saint Anne’s Hospital, and Lawrence General Hospital offered to buy the pair of Holy Family Hospitals in Methuen and Haverhill. Boston Medical Center’s offer to take over Good Samaritan Medical Center and St. Elizabeth’s Medical Center is still in the works.

Steward’s sale hearing, provided it doesn’t see a further delay, is set for 4 p.m. on Wednesday, in the Bankruptcy Court Southern District of Texas before Judge Christopher Lopez.

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