Dallas-based Steward Health Care has received approval from U.S. Bankruptcy Judge Chris Lopez for a $225 million loan to support operations ahead of the auctioning of its 31 hospitals and physician group, Stewardship Health.
The health system shared June 10 that it had locked in the funding from a group of "Steward's secured FILO Lenders." The lenders are WhiteHawk Finance, OneIM, MidOcean, Owl Creek Investments and Brigade Capital Management, a spokesperson from Steward confirmed with Becker's June 13.
"Having long term financing for the company to get through these Chapter 11 cases is obviously very meaningful and I think will allow us all to move on to other important issues to maximize value and save the thousands of jobs we do have at issue, as well as take care of the patients of Steward hospital healthcare," Steward attorney Ray Shrock said during a June 13 hearing.
Now that the funding has been approved by Mr. Lopez, the health system is facing questions about what will happen should some of its hospitals not receive bids during the upcoming auctions.
"While we hope that ultimately all hospitals will receive bids, and there will be new operators for each of these hospitals, we are obviously concerned about a situation when there is no bid for a particular hospital," Hugh McDonald, a lawyer for the Commonwealth of Massachusetts and health and human services offices, said during the hearing.
Steward now has eight hospitals in Massachusetts, according to its website.
Mr. McDonald said a transition agreement or plan needs to be put into place to secure the future of any hospital that does not receive bids. He also noted that in Massachusetts there is a required 120-day notice period should a hospital close.
Thomas Patterson, a lawyer for Medical Properties Trust, Steward's landlord, confirmed during the hearing that the company has no plans to fund the Steward hospitals that do not receive bids.
"We have had discussion with the debtors at a high level with regard to what happens to hospitals that don't receive a bid," Mr. Patterson said. "At the moment MPT has made no such commitment to fund hospitals that don't receive a bid on a working capital basis at any particular point and time."
The first round of Steward's hospitals, except its Florida hospitals and certain Texas facilities, and Stewardship Health have a June 24 bid deadline and July 11 first sale hearing. The second round of sales for four Texas Steward hospitals and its Florida facilities have an Aug. 12 bid deadline and Aug. 22 sale hearing.
Becker's has reached out to Steward for comment and will update this story should more information become available.