by Sam Hieb
The bankruptcy hearing for Eden’s Morehead Hospital was once again continued in order to give attorneys to further review financial documents related to the proposed sale to aFlorida-based for-profit healthcare partnership.
The basic question is where Miami-based Empower iHCC will get the cash to make the purchase:
The hearing was suspended as the chief executive officer of Empower iHCC, Noel Mijares, was explaining the complex financial arrangement under which a lender has guaranteed the $15 million Empower will use to buy and operate the hospital and its buildings.
A creditors’ attorney in Morehead’s Chapter 11 case asked Mijares if his company could raise the money if the loan is reduced or falls through.
A finance company has guaranteed to lend the money to Empower if the hospital’s buildings appraise for their roughly $27 million tax value. Andrew Sherman, an attorney for the creditors in Morehead’s Chapter 11 case asked how Empower could guarantee it would pay the $11.06 million it has offered if the appraisal falls short and the lender reduces its loan.
Mijares said his company’s corporate partners could make up the difference and attorneys began to offer financial documents to support his answer. At that point, Kahn interrupted the hearing to give attorneys time to review seven documents that were introduced in testimony.
Judge Benjamin Kahn did take one definitive step during the hearing—denying a request by the N.C. Attorney’s General’s Office to further delay any decision for 30 days so they can review the case in order to ensure that Morehead’s “nonprofit mission will be carried forward.”
We learned earlier this week that the U.S. Department of Housing and Urban Development was involved in Morehead’s bankruptcy case, now we learn the Attorney General’s office wants to get involved. And we wonder about the state of healthcare in our country.
But the bigger issue is the fact that Morehead continues to “burn cash” and is facing a “short runway”–as the investment banker serving as an expert witness put it—toward closure. Then where will the people in Rockingham County seeking medical care be? With that in mind, Judge Kahn conceded that the sale to Empower “appears to be the best scenario.” But we are left to wonder for a few more days at least.