A judge has formally approved a bankruptcy plan for El Paso (Texas) Children's Hospital, ending a months-long legal battle between University Medical Center of El Paso and Children's over outstanding debt, according to an El Paso Inc. report.
Here are five things to know about the settlement plan.
1. U.S. Bankruptcy Judge H. Christopher Mott, who has overseen the dispute since Children's filed for bankruptcy in May, approved the settlement plan.
2. Children's owes UMC $106 million in unpaid rent, as well as $10 million for services to Lubbock-based Texas Tech University Health Sciences Center and another $7 million to drug companies and other vendors, according to the report. Under the settlement, UMC will immediately pay the vendors, and immediately pay Texas Tech $2 million, according to the report. The rest of that debt to be paid off during the course of several years. In regard to the $106 million in unpaid rent, $58 million will be forgiven under the agreement. The rest — $48 million — will stay on the books to be paid over years after Texas Tech is made whole, according to the report.
3. Under the bankruptcy plan, Children's monthly rent payments to UMC will decrease from $869,000 to $500,000, or by $6 million a year.
4. Children's contract CEO Mark Herbers, who has been serving as a contractor with AlixPartners, will be replaced by a new interim CEO, George Caralis of Deloitte Corporate Restructuring Group, a turnaround specialty firm.
5. The bankruptcy plan takes effect Jan. 8.