Forum prefers to keep Northside in system
Buyers are showing interest in the Valley health-care network, a creditors’ spokesman said.
YOUNGSTOWN — A new cash-collateral agreement between Forum Health and its major creditors contains the separation of Northside Medical Center from the rest of the health-care system.
That is one option, but creditors say the most likely scenario is the reorganization or sale of Forum as a whole.
All options remain on the table, said Lance Ignon, spokesman for Forum’s major creditors. They have to be to ensure Forum has the most flexibility to pursue its goals, he said.
Ignon said, however, “By far the most likely outcome is either reorganization or an acquisition of the entire system, either one of which would put Forum on a more stable footing, rather than a separation of assets.
“No one wins if any part of Forum fails. The community, the employees and the creditors are better off if Forum remains intact, keeping in mind that each of its facilities have to show the ability to be profitable.”
Ignon added there is reason for optimism. Progress is being made, Northside is doing better, and buyers are interested in the system, he said.
Vince Bevacqua, a hospital spokesman, said the new consensual cash-collateral agreement is the same as the original agreement reached in April.
“In checking with Forum lawyers, the only difference in the filing [Thursday] is that the dates have been changed to Nov. 1 and Nov. 30 for plan filing and activation, respectively,” he said.
According to the cash-collateral document filed and approved Thursday by U.S. Bankruptcy Judge Kay Woods, Forum must, by Nov. 1, submit to its major creditors “written evidence” that Western Reserve Care System (Northside) and the Western Reserve Health Foundation will achieve financial and operational separation by Nov. 30.
The Thursday court order extends Forum’s ability to use cash collateral on hand to operate through Jan. 14.
Besides Northside, major components of the Forum system include Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland.
Forum filed March 16 for protection under Chapter 11 of the U.S. Bankruptcy Code. Chapter 11 is for reorganization, not liquidation.
While Forum has use of its collateral cash, it is subject to financial and planning deadlines. Failing to meet them could trigger termination of the use of cash collateral before Jan. 14, according to court documents.
For example, if Forum permits total external receipts or operational disbursements to vary unfavorably from the budget by more than 10 percent in any four-week period, creditors could request to terminate the agreement.
Northside and TMH individually are under similar restrictions. And Forum Health overall is not allowed to permit consolidated unrestricted cash and investments to be less than $20 million.
Also, the document requires that Forum solicit bids by Nov. 13 to determine if “one or more” of its hospitals can be sold for enough money to pay all of its debts “in full in cash.”
By the end of November, according to Forum’s court filing, it and its creditors are to agree on whether Forum will pursue a “mergers and acquisition process” or stay on its current path of reorganization.
A bankruptcy court hearing is scheduled for 9:30 a.m. Tuesday on a Forum motion to hire an interim CEO at $75,000 a month. His initial contract would expire Dec. 31, subject to automatic monthly renewal thereafter unless either Forum or FTI Consulting, for whom the interim CEO works, gives at least 230 days notice of intent to terminate the contract.
The man Forum has asked Bankruptcy Judge Kay Woods to name as interim CEO is Charles W. Neumann, who has 30 years of health-care business and management experience.
BANKRUPTCY DEADLINES
Forum Health has to meet a number of deadlines set forth in its new cash-collateral agreement with major creditors:
Immediately: Solicit bids for any and all assets.
Oct. 30: Submit to creditors a draft-form purchase agreement and bidding procedures.
Nov. 13: Deadline for bids from potential buyers.
Nov. 30: Achieve agreement with creditors on whether Forum will follow a merger/acquisitions or reorganization path.
Source: U.S. Bankruptcy Court documents