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Forum creditors ask for trustee
YOUNGSTOWN — Forum Health’s secured creditors have asked the bankruptcy court to deny Forum’s request for a 45-day extension of its exclusive right to create a plan to exit bankruptcy.
The creditors, jointly called the consent parties, said Forum’s actions have led to a “crisis of confidence in its management,” and also said they would seek the appointment by the court of a Chapter 11 trustee, “one with experience in running health-care systems.”
Forum, in its motion asking the court to extend exclusivity while it works to achieve a consensual plan, said that if its exclusivity ends, any progress made to date would be at risk from the threat of competing plans.
Forum said the moves it has made have slowed the cash drain, and said all indicators point to all of Forum’s pieces being able to emerge successfully from bankruptcy.
Forum’s president, Walter “Buzz” Pishkur, has predicted that Forum will emerge from bankruptcy by the end of the year.
Forum filed for Chapter 11 bankruptcy reorganization protection March 16. Forum was to present a plan for exiting bankruptcy today to the court, but it is seeking an extension of its exclusive time to do so until Oct. 31.
Forum also has moved the court for an order authorizing it to continue to use cash collateral through Dec. 31, saying it would be forced to cease operations if that order isn’t granted. The cash collateral is the cash Forum has on hand for operations from the bond holders and secured creditors. A hearing on Forum’s motions will be at 10:30 a.m. today before U.S. Bankruptcy Judge Kay Woods on the third floor of the Nathaniel R. Jones Federal Building and U.S. Courthouse, 10 E. Commerce St.
Forum consists of three hospitals — Northside Medical Center in Youngstown, Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland — and numerous pharmacy, home health care, laboratory and rehabilitation subsidiaries.
In a Monday court filing, the consent parties said they have “significant concerns regarding the ongoing deterioration of Forum’s cash position, the inability or unwillingness of Forum to make difficult decisions and take advantage of the tools provided by bankruptcy to excise costs and restore the hospitals to profitability.”
“Forum is not close to filing a reorganization plan acceptable to the consent parties. Indeed, the consent parties have not even seen a draft of a plan. The consent parties did receive a term sheet on Sept. 3 that was devoid of substance or economics,” according to their filing.
Also, Forum has been unable to separate Northside Medical Center financially from the rest of the system such that it can stand on its own by Sept. 15 as required by the cash collateral agreement.
“Northside continues to require funding from TMH with no apparent ability to repay the advance. As a result, both institutions remain at great financial risk,” according to the consent parties filing.
The creditors said Forum lost almost $100 million of the creditors’ collateral in the four years before the bankruptcy filing.
The consent parties are MBIA Insurance Corp., the bond insurer; U.S. Bank National Association, the master trustee and bond trustee; J.P. Morgan Chase Bank and Fifth Third Bank.
In its recent court filings, Forum has painted a rosier picture than its creditors, saying it has been working on a plan of turnaround and reorganization and retained an investment banker to assist it in that effort.
Forum has reached concessionary agreements with all nine of its labor unions, which it said is “a testament to the debtors’ willingness to work towards consensus, rather than contention.”
Forum said it has achieved immediate money savings by increasing operating efficiencies in all its locations. In doing so over the past five months, it said it has “slowed the cash drain from the health care system, with all indicators pointing to an imminent likelihood that all Forum subsidiaries” will emerge successfully from bankruptcy.
alcorn@vindy.com
milliken@vindy.com