Healthcare: $1B bankruptcy looms for St. Vincent’s
By Barbara Benson for Crain’s New York
St. Vincent’s Hospital has filed a proposed closure plan with the New York State Department of Health. If state officials accept the plan, St. Vincent’s will likely file for bankruptcy tomorrow if not earlier, according to a source that has been briefed on the plans by hospital management. The Chapter 11 filing has been expected for several weeks, even before it was clear St. Vincent’s had to close and lay off thousands for workers.
A bankruptcy filing is expected to be part of the closure plan. But if the state health department finds the plan inadequate and asks the hospital to rework its plan, a bankruptcy filing would be delayed.
The filing will show that the hospital has liabilities of around $1 billion, nearly 50% more than the $700 million in debt it was thought to have. When St. Vincent’s filed for its first bankruptcy, in July 2005, it had debt of roughly $1.1 billion.
A St. Vincent’s spokesman declined to comment.
The hospital bankruptcy counsel is the law firm Kramer Levin Naftalis & Frankel.
The decision to file was made by the hospital’s chief restructuring officer, Mark Toney, and the board of trustees. On Monday, the hospital handed a pink slip to President and Chief Executivere Henry Amoroso, whose appointment was announced in June 2007. Mr. Amoroso was St. Vincent’s fourth CEO since 2004.
Saint Vincent Catholic Medical Centers emerged from Chapter 11 in the summer of 2007 with more than $700 million of financial and contractual debt. That debt is roughly $300 million less than it had when it entered bankruptcy. The failure to wipe out the debt during that first bankruptcy proved to be a legacy that doomed the hospital. Some observers have long noted that St. Vincent’s generously agreed to pay unsecured creditors about 80 cents on the dollar for about $190 million in debt.
Since then, SVCMC tried to improve its operations, slash costs and increase revenues. But those steps did not remove the burden of tens of millions of dollars in annual debt service and other payment obligations under the confirmed plan of reorganization, according to documents related to its first bankruptcy.
