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YOUNGSTOWN — Forum Health can pay employee wages and benefits and vendors after a laundry list
YOUNGSTOWN — Forum Health can pay employee wages and benefits and vendors after a laundry list of motions were granted Tuesday in U.S. Bankruptcy Court.
In a hearing that lasted nearly three hours, Judge Kay Woods approved Forum motions that allow the financially strapped hospital system to operate with relatively normal business operations while it tries to implement a financial plan aimed at becoming profitable.
Forum filed Monday for protection under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court here.
Forum owes its creditors $139 million, including $25 million that is unsecured, said Walter J. Pishkur, Forum president and chief executive officer.
Forum was represented by Attys. Shawn M. Riley and Paul W. Linehan of the Cleveland firm McDonald Hopkins and Atty. Michael A. Gallo of Nadler Nadler & Burdman in Youngstown.
Heather Lennox of Jones Day was the lead attorney for a team of lawyers representing Forum’s lenders/bondholders.
The Office of the United States Trustee, Department of Justice, which provides oversight for the bankruptcy process, was represented by Attys. Ronna Jackson and Andrew R. Vara.
The major debate during Tuesday’s procedures came on a motion by Forum to use cash collateral, or cash on hand, of the bond holders and secured creditors to operate.
“Absent the use of cash collateral, Forum would be forced to cease operations,” the motion said.
Bondholder attorneys argued that because Forum has been in default over three years and has lost $50 million, virtually all attributable to Northside Medical Center, there should be more stringent control of the cash collateral.
Lennox said, “We wish Forum success and understand the importance of the hospital to the community. However, Forum may have to sell or shutter Northside to preserve the viability of the other facilities.”
She went on to say: “Forum has been living off the profits of Trumbull Memorial Hospital and the burning of lenders’ cash. Three years is a long time to not take action, and the losses have continued to pile up.”
Nothing would be worse to put at risk the profitable portions of Forum, Lennox said. Forum’s Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland have been profitable or broken even in recent years.
Pishkur testified that Forum has developed and has begun to implement a financial turnaround plan.
“With the proper amount of time and cooperation, we will succeed,” he said.
Pishkur said he thinks the arrangement to use the cash collateral would allow enough time for the financial turnaround.
Forum, in its motion, sought a two-business-day notice for termination of the use of cash collateral.
Judge Woods granted the motion.
alcorn@vindy.com