Indiana’s Monroe Hospital files Chapter 11 liquidation plan

About one month after receiving court approval to sell its 32-bed acute-care surgical hospital in Bloomington, Monroe Hospital LLC filed a Chapter 11 plan of liquidation and disclosure materials explaining the plan.

A judge in Indianapolis authorized the sale of the hospital to an affiliate of Prime Healthcare Services Inc. on Oct. 27. The sale is scheduled to be completed on Dec. 31, according to the disclosure statement.

Hospital lessor MPT Bloomington LLC and affiliated lender MPT Development Services Inc. are collectively owed about $121.8 million. The claim is partially secured by a lien on substantially all of the hospital’s assets, according to court papers.

Under the proposed plan, the portion of MPT’s claim that’s secured would be paid by the buyer as part of the purchase price. This amounts to a projected recovery of 4.1 percent, according to the disclosure statement.

Monroe and Indianapolis-based St. Vincent Health signed a management agreement two years ago, with St. Vincent taking responsibility for Monroe’s quality and safety efforts, finance functions, physician relations and patient satisfaction.

St. Vincent also considered adding Monroe to its 22-hospital network. Those merger talks and St. Vincent’s management of those Monroe services ended in 2013, but longtime St. Vincent executive Joe Roche was installed as Monroe’s CEO.

St. Vincent is now one of Monroe’s largest creditors, with the hospital owing St. Vincent’s physician group $170,000. St. Vincent physicians provide cardiac care and orthopedic surgeries to Monroe patients.

Recovery on general unsecured claims is “unknown,” according to the disclosure statement. Claimants would get their pro rata share of assets remaining in a liquidating trust after all administrative and priority claims have been satisfied.

MPT’s deficiency claim would be subordinated to other general unsecured claims. There won’t be any assets remaining in the liquidating trust to satisfy it, according to the disclosure statement.

MPT on its secured claim and general unsecured creditors are the only parties entitled to vote, according to the plan.

Equity interests would be canceled and holders are deemed to reject the plan, according to the disclosure statement.

The hospital filed for Chapter 11 protection in Indianapolis in August, citing insufficient cash flow as a result of low patient census and high expenses.

The petition listed assets of less than $50 million and liabilities exceeding $100 million.

 

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