Bankrupt Steward Health Care won initial approval of a settlement with its landlord Medical Properties Trust Inc. that will resolve billions of dollars in lease obligations and hand over more than a dozen hospitals to new managers, averting their potential closing.
Judge Christopher Lopez said Wednesday he’d give interim approval to the settlement, a critical step to transitioning Steward hospitals to new operators. The pact also provides a path to distributing $395 million generated from the sale of Steward’s northern Florida hospitals to company lenders and lower ranking unsecured creditors.
Under the deal, Steward and its unsecured creditors committee agreed to drop potential claims against MPT in exchange for the real estate investment trust waiving substantial lease obligations, lawyers said during a court hearing. Transitioning the hospitals to new operators will save Steward from incurring additional operating expenses and averts potentially costly litigation, company lawyer Ray Schrock said.
Schrock said Steward will continue finalizing the settlement with various stakeholders in the coming days. Judge Lopez will consider giving final approval to the deal later this month. Steward announced the settlement on Aug. 30.
Steward’s failure has attracted scrutiny from state and federal lawmakers and put the company’s hospitals at risk. Last month, the bankruptcy court approved the closing of two of Steward’s Massachusetts hospitals. Steward sold its other hospitals in the state after Massachusetts provided emergency funding.
A Senate committee is scheduled to hold a hearing Thursday on the health system’s alleged mismanagement. The company operated about 30 hospitals in Florida, Massachusetts and other states when it filed Chapter 11 in May, and has been working to sell its hospitals to new owners.
The bankruptcy case is Steward Health Care System LLC, 24-90213, US Bankruptcy Court for the Southern District Court of Texas.
https://finance.yahoo.com/news/steward-hand-off-hospital-operations-160230360.html
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