Court Confirms Saint Vincent’s Chapter 11 Plan
Wrapping up one of the most complicated healthcare bankruptcy cases in the United States, the U.S. Bankruptcy Court for the Southern District of New York confirmed the Chapter 11 plan of Saint Vincent Catholic Medical Centers of New York and various of its affiliates (Saint Vincent’s).
Grant Thornton LLP served as interim management and Kramer Levin Naftalis & Frankel LLP served as debtor’s counsel for what has been recognized as one of the largest and most complex bankruptcy proceedings for the historic New York City hospital system founded in 1849. In a case that, at times, was potentially unable to pay its post-bankruptcy expenses, Saint Vincent’s Chapter 11 plan provides for a 100% recovery for administrative, priority creditors and secured lenders, and a substantial recovery by the employees and pensioners. Importantly, Saint Vincent’s successfully consummated several going-concern sales of its healthcare services, preserving critical patient care needs in the communities served by the hospital system.
Grant Thornton practice leader and national managing partner Mark E. Toney and Grant Thornton partner Steven Korf were appointed as chief restructuring officer and chief financial officer, respectively. As crisis and interim management of Saint Vincent’s, Grant Thornton and Saint Vincent’s lead counsel, Kenneth H. Eckstein and Adam C. Rogoff of Kramer Levin, worked together on numerous initiatives to first attempt to preserve the healthcare system, including obtaining interim funding and identifying a potential new sponsor. When no parties stepped forward to provide a full service hospital, the team moved to secure the continuity of care and protection of patients in an orderly closure of the Manhattan Hospital located in the Lower West Village of New York City and continued operating numerous other services, including a behavioral health hospital and three nursing homes, until transactions with new sponsors could be identified and consummated.
“Managing Saint Vincent Catholic Medical Centers’ second bankruptcy required balancing the complexity of the bankruptcy, the need for compassion for the patients, community and staff, and the cooperation of the constituent groups involved. We had to balance the interests of these wide ranging groups in Saint Vincent’s court-supervised restructuring process to generate the positive outcome that has resulted,” said Toney.
“The complexity of this bankruptcy was magnified by the recognition of the hospital’s charitable mission and dedication to meeting the needs of patients. Reaching the milestone of plan confirmation, which balanced this mission with recoveries for creditors, is something of which we are very proud,” said Eckstein.
During the case, the Saint Vincent’s management and legal team negotiated a $260 million sale of the Manhattan Hospital campus with the Rudin Family, which includes a requirement for opening a new comprehensive care center, including a precedent-setting free-standing emergency department, by North Shore-LIJ hospital. This transaction won M&A Advisor’s 6th Annual Turnaround Awards for Turnaround Community Impact Deal of the Year and Healthcare/Life Sciences Deal of the Year.
Key members of the team involved with the bankruptcy were: