Wednesday, October 5, 2011

Mayor presents 30% settlement to hospital's creditors for approval to keep hospital open

From the office of the Mayor:

MAYOR DAWN ZIMMER COMMENTS ON THE STATUS OF NEGOTIATIONS WITH THE CREDITORS COMMITTEE REGARDING THE SALE OF HOBOKEN UNIVERSITY MEDICAL CENTER

HOBOKEN, NJ, October 5, 2011 --  Mayor Dawn Zimmer is providing comment today regarding the status of negotiations with the creditors committee relating to resolution of issues pertaining to approval of the sale of Hoboken University Medical Center (HUMC).

“Last night (Tuesday), the Official Committee of Unsecured Creditors was presented with a final Settlement Agreement that would guarantee a minimum of a $10.2 million contribution to a creditors fund.  The proposed Settlement Agreement, which was based on weeks of negotiation and met the previous economic demands made by the Creditors Committee, would provide unsecured creditors with approximately a 30 percent recovery on their claims, well above the 3-4 percent distribution typical of most hospital bankruptcies. This dividend is made possible only as a result of the proposed sale of the hospital to HUMC Holdco LLC, the State of NJ’s offer to contribute $5 million, if necessary, and the additional consideration offered by HUMC Holdco for the direct benefit of creditors.

“If the sale is not completed, HUMC will be forced to close.  In that event, it is likely the State will withdraw the offer to contribute the $5 million.  This would result in virtually no distribution to unsecured creditors, the elimination of over 1,100 jobs and the loss of critical healthcare services to the residents of Hoboken and surrounding communities.

“HUMC has been running on fumes to reach this point, and cannot survive further delays.  A hearing is scheduled in Bankruptcy Court tomorrow (Thursday, October 6).    This hearing has been postponed several times in order to facilitate ongoing negotiations, but there is no longer any flexibility in the remaining timeline.  The Committee has been advised that it must accept the Settlement Agreement by early this afternoon (today), which is the only way tomorrow’s hearing will go forward.  If the Settlement Agreement and Hospital sale are not approved at tomorrow’s hearing, the Hospital Authority will be compelled to take immediate steps to close the Hospital to ensure the safety of its patients.

“The Settlement Agreement offers unsecured creditors far more than would be otherwise available, while saving HUMC and relieving Hoboken’s taxpayers of a burdensome $52 million bond guaranty. Despite the repeated delays, I remain hopeful that we will be able to successfully complete this transaction since it provides the only acceptable alternative for all of the parties involved.”
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