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Ex-Forum hearing turns into a debate
YOUNGSTOWN
A hearing in U.S. Bankruptcy Court to consider confirmation of the former Forum Health liquidation plan turned into a debate over whether unsecured creditors should get more of the millions of dollars in the defunct hospital system’s two charitable foundations.
The foundations, the Western Reserve Health Foundation (Northside Medical Center) and the Trumbull Memorial Hospital Foundation have a combined $12 million in assets.
In March 2011, Bankruptcy Judge Kay Woods ruled donations to the foundations off-limits to creditors. In her decision, she said the foundation money cannot be used to pay creditors or other debts.
Her order, however, was appealed by the Committee of Unsecured Creditors in U.S. District Court presided over by Judge Benita Pearson. A decision is pending.
Unsecured creditors are vendors who supply food and medical suppliers and other items.
In the meantime, the charitable foundations offered to contribute $1 million toward the costs of Forum’s bankruptcy, which was filed March 16, 2009.
At Tuesday’s hearing, Forum’s attorney, Sean Malloy, noted that the vast majority of unsecured creditors who voted on the liquidation plan approved it. He said 1,242 ballots were sent out and of the 213 who responded, 207 approved the plan.
Financial experts for the debtors (Forum Health) and unsecured creditors testified and were cross-examined at length about the adequacy of the $1 million offer from the foundations and methodology used to arrive at the number.
Dalton Edgecomb of the Huron Consulting Group, who has been Forum’s financial adviser since July 2008 and its chief restructuring officer since the petition for bankruptcy was filed, called the foundations’ $1 million offer “more than reasonable.”
In its court filing, the unsecured creditors’ attorney described it as “woefully inadequate.”
The secured creditors in the Forum case, bond holders, were paid through the sale Oct. 1, 2010, of Forum Health to Community Health Services for $120 million and some $46 million in cash on hand and the debt-service reserve fund.