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Forum creditors seek release of Ardent memos
By WILLIAM K. ALCORN
YOUNGSTOWN
The major secured creditors of Forum Health have asked the U.S. Bankruptcy Court to make available to them the memorandums of understanding between Forum’s unions and Ardent Health Services, potential buyer of the bankrupt health-care system.
Specifically, the creditors, known collectively as the consent parties, have asked Judge Kay Woods to set aside a motion filed by Ardent for a protective order against a subpoena served by MBIA, insurer of the creditors’ Forum bonds.
The consent parties, which have filed a reorganization plan of their own, want court authorization to conduct discovery, including memorandums that are believed crucial to Ardent’s bidding $69.8 million for Forum.
Access to the memorandums are necessary to evaluate if the sale to Ardent would maximize Forum’s assets, said a motion filed by MBIA.
At a June 22 court hearing, after considerable debate in court, Judge Woods ruled the memorandums of understanding between Ardent and Forum’s unions would not be available to any subsequent bidders or anybody else.
MBIA objected to that ruling, however, and said in a later motion it would object further to the sale of Forum to Ardent on or before Aug. 9, the date set for objections to the sale by the court. Also, Judge Woods set Aug. 5 as the deadline to submit bids to buy Forum. At this point, Ardent is the lone bidder.
In its motion, MBIA said it would enter into a stipulated protective order to maintain the confidentiality of information produced as part of discovery.
Ardent’s cross-motion asks the court for a protective order that would direct MBIA to withdraw a subpoena for records, dated June 16 and issued out of the U.S. District Court for the Middle District of Tennessee, which was served on Ardent at its headquarters in Nashville.
Ardent argued that the information sought by MBIA is “proprietary and/or confidential,” according to court documents.
MBIA, however, said the information is necessary not only to determine if the sale maximizes value of Forum’s assets, but whether fair value is being paid for those assets, whether any estate value was unfairly given or promised to the unions as part of the memorandums of understanding, and whether the sale process was fair.
Forum Health filed for protection under Chapter 11 of the U.S. Bankruptcy Code in March 2009. Forum has between 3,500 and 4,000 employees at its hospitals: Northside Medical Center in Youngstown; Trumbull Memorial Hospital in Warren; and Hillside Rehabilitation Hospital in Howland.