Judge approves Steward obtaining third-party funding to continue – WFMJ.com News for Youngstown-Warren Ohio
In a recent development in the US bankruptcy court, Judge Christopher Lopez has approved Steward Health’s emergency motion to obtain third-party funding to continue operating past next Tuesday. This decision comes as Steward faces the challenge of selling 31 hospitals under its umbrella.
During the court hearing in Houston, Steward’s attorneys requested an extension for the sale of the hospitals, proposing to conduct the sale in two rounds. The first round is scheduled for a July 11 sale date, with the final sale approval set for August 22. However, some objections were raised against the emergency motion, citing concerns about due process rights.
Steward Health is seeking to borrow an additional $225 million, with a commitment fee to guarantee reimbursement for the parties involved. The company is exploring third-party debtor-in-possession (DIP) options for the funds, a move that was met with skepticism by the chief restructuring officer for Lazard Freres & Co.
The judge granted Steward’s motion for third-party funds but emphasized the importance of using the funds judiciously and conducting a competitive bidding process in the coming weeks. The successful sale of the hospitals is crucial, as emphasized by the judge, who highlighted the difference between selling hospitals and warehouses.
Steward Health, which operates 31 hospitals in eight states, including facilities in Warren, Howland, and Sharon, filed for Chapter 11 bankruptcy in May. The proposed sale of its physicians’ network to Optum, a division of UnitedHealth, has faced objections from the Justice Department, raising more questions about the company’s restructuring plans.
The judge’s approval of Steward’s motion ensures that third-party lenders will be repaid before other lien holders. Additionally, the appointment of ombudsmen by the US Trustees aims to facilitate communication between debtors and lenders in navigating the complex bankruptcy proceedings.