Reorganization of hospital system begins today in court

By Don Shilling | March 17, 2009 at 12:00a.m.

Forum Health

Forum will be in federal court this afternoon to seek authority to pay its employees and provide benefits.

A bankruptcy judge now is calling the shots for Forum Health, and she starts today.

Forum Health attorneys will be before Judge Kay Woods in federal bankruptcy court in Youngstown at 2 p.m. today to ask for permission to use the cash it has on hand to keep the business operating.

Forum said in a court motion that it would have to shut down if it isn’t allowed to use its cash to pay its bills.

Such authorization is routinely granted at the start of bankruptcy cases as a company tries to reorganize.

Other routine motions filed by Forum include requests to pay employees, provide them with health insurance and allow them to take vacation and sick days.

Such approvals are needed because a company in bankruptcy has all of its operations overseen by the judge. In exchange for that oversight, the company is protected from its creditors.

Forum intends to use that protection to develop a reorganization plan that would allow it to operate profitably in the future.

One of Forum’s creditors said the key to developing that plan will be the cooperation of many groups, including elected officials, unions, creditors and physicians.

Joe Caccarozzo, practice administrator for Associates in Anesthesiology in Boardman, said he hopes those groups can meet and agree to do what’s necessary to make Forum viable.

“What needs to be done for Forum to survive? Who has to give up? Who has to give in?” he asked.

The area can’t afford to lose the 4,000 jobs at the health care provider, he said.

Forum will be given time to propose a plan to the judge, with committees of lenders and creditors given the chance to provide input.

Such plans can include changes to union contracts and a reduction in amounts that are owed to secured lenders and unsecured creditors. A secured debt is tied to a lien on an asset in case of bankruptcy.

Forum released its top 50 unsecured creditors, who are owed $8.4 million. This included debts to these local companies: Gamma Med of North Jackson, $72,900; OSS Inc., a security company in Warren, $42,400; and Associates in Anesthesiology, $41,700.

Forum’s top unsecured creditors are Siemens Healthcare Diagnostics in Deerfield, Ill., $1.3 million; and Owens and Minor, a medical supply distributor in Mechanicsville, Va., $962,000.

Forum issued a statement that said bankruptcy laws allow it to pay its suppliers for goods and services that are delivered after the bankruptcy case was filed.

By law, Forum cannot pay for deliveries that were made before the bankruptcy filing. The court will determine the level of payment for such deliveries at a later time.

Forum said it is too early to estimate payments that will be made to creditors at the end of the case.

shilling@vindy.com