Steward Health Care, a US-based company currently navigating bankruptcy proceedings, has received permission for using a $30m lifeline by Massachusetts authorities amidst efforts to sell six medical centres.
Five of the hospitals that the company plans to restructure and sell are located in the Bay State area.
These hospitals are Morton Hospital, Holy Family Hospital, Good Samaritan Medical Center, St. Anne’s Hospital and St. Elizabeth’s Medical Center.
Last month, the company also confirmed impending closure of two Massachusetts hospitals, including Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer.
Bloomberg reported that the state has paused this taxpayer-backed financing until Steward finalises the sales, which are currently hindered by unresolved issues with potential buyers and the hospital landlord, Medical Properties Trust (MPT).
During a Texas bankruptcy hearing, Steward's legal representation highlighted the critical juncture faced by the company, which is low on funds and under congressional scrutiny.
The report cited Ray Schrock, a lawyer for Steward, who indicated that upcoming negotiations in New York with financial stakeholders, including MPT and affiliates of Macquarie Asset Management, who hold a master lease for two hospitals, are crucial for the progress.
Apollo Global Management, a lender to MPT and Macquarie, is also expected to participate in the discussions.
If the talks are successful, Steward could request court permission to access the $30m financing within the next week, Schrock added.
However, failure to secure this funding could necessitate the transfer of patients to other facilities.
Steward's hospitals in Massachusetts face substantial rent obligations, amounting to approximately $114m annually, as per court documents cited by Bloomberg.
The bids received for the hospitals fall short of these obligations, leading to the impairment of MPT and Macquarie's real estate investment in the state.
Judge Christopher Lopez has also approved Steward's request to reject the Massachusetts hospitals’ master lease, as the bids received were significantly lower than the real estate value implied by the rent.
Additionally, Lopez indicated he would allow the closure of two hospitals, Carney Hospital and Nashoba Valley Medical Center, which did not attract viable bids.
The bankruptcy case is being heard in the US Bankruptcy Court for the Southern District of Texas.
