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Saint Vincent's plan gets approved

by Kelsey Butler | Published May 22, 2012 at 2:43 PM

Saint Vincent Catholic Medical Centers of New York is headed to a June 25 confirmation hearing now that a New York judge has approved the hospital operator's disclosure statement.

Judge Cecelia Morris of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan on Monday, May 21, signed an order approving the debtor's disclosure statement.

Under Saint Vincent's amended plan, filed May 14, administrative and priority claims would be paid in full in cash.

Secured creditors would either receive the collateral securing their claim or the proceeds of the sale of such collateral, court papers show.

General unsecured creditors would receive a pro rata share of a fund established to repay this creditor class.

The plan will be funded by the liquidation of Saint Vincent's assets, court papers said.

Morris on Aug. 4 approved the $34 million sale of the debtor's Staten Island, N.Y., assets.

The offer of stalking-horse bidders SV Operating Three LLC and SV Land Three LLC went unchallenged by a July 25 deadline, so a scheduled July 28 auction was canceled.

Under terms of the deal, SV Operating Three and SV Land Three acquired substantially all of the assets of Sisters of Charity Health Care System Nursing Home Inc., which did business as St. Elizabeth Ann's Health Care & Rehabilitation Center.

St. Elizabeth Ann's provided care for ventilator-dependent people, neurobehavioral rehabilitation and various AIDS-related services, the facility's website said.

The stalking-horse bidders paid $15 million for real estate assets and $19 million for the nursing home assets. Through the sale, SV Land I LLC will lease the debtor's Bayley Seton campus for $1 a year and take over the cost of maintaining the property, estimated at $2 million a year.

The Bayley Seton campus, which is adjacent to St. Elizabeth Ann's, contains several abandoned buildings, including Staten Island's first hospital. There are no current operations at the campus, but a portion of the property is leased to Richmond University Medical Center and St. Elizabeth Ann's, which uses it for 72 neurobehavioral beds. The lease will contain a put option, allowing the debtors to sell the property for $1, and a call option, which gives SV Land I the option to buy the property for $1.

The debtor closed its core business -- its Greenwich Village hospital -- on April 6, 2010, and filed for Chapter 11 for a second time eight days later.

Overwhelming staffing costs, the inability to repay creditors under its previous confirmed reorganization plan and the "profound financial crisis" contributed to the hospital operator's second bankruptcy filing. A potential sale to Mount Sinai Medical Center to solve the debtor's liquidity issues fell apart in March 2010, which also contributed to the filing.

The hospital operator ultimately could not make payments to creditors under its previous reorganization plan, confirmed July 27, 2007, by Judge Adlai Hardin Jr. of the Manhattan court. It had filed for Chapter 11 for the first time on July 5, 2005.

During its previous bankruptcy case, the debtor sold its Bayley Seton campus to St. Elizabeth Ann's for $34.9 million on Aug. 21, 2007, after its reorganization plan had already been confirmed.

Kenneth Eckstein, P. Bradley O'Neil and Adam C. Rogoff of Kramer Levin Naftalis & Frankel LLP are debtor counsel.

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