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Creditors of Forum fight on for funds
Judge’s ruling appealed; $12 million in charitable hospital funds sought
YOUNGSTOWN
The unsecured creditors of the former Forum Health system are still trying to get more than $12 million in unrestricted donations to charitable foundations that supported Forum’s hospitals.
The committee of unsecured creditors filed a notice of appeal to U.S. District Court of U.S. Bankruptcy Judge Kay Woods’ decision that they can’t have the money.
Judge Woods last week granted motions by Western Reserve Health Foundation that supported Northside Medical Center and the Trumbull Memorial Hospital Foundation that supported TMH to be dismissed from the Forum Health bankruptcy case.
Forum’s unsecured creditors asked Judge Woods to stay her order on the foundations and their money pending the creditors’ appeal and to have a hearing soon on their request for the stay.
“If the foundations are dismissed from these Chapter 11 cases pending the committee’s appeal, the bankruptcy court will no longer have any supervisory power over their assets,” the unsecured creditors said in a court filing Thursday.
Having gone through Chapter 11 bankruptcy, Forum’s hospitals were sold last fall to Community Health Systems, a Tennessee-based for-profit business for $120 million.
The unsecured creditors, who do not have a pledge of Forum’s assets, are suppliers of goods and services to the Forum hospitals.
The creditors’ notice of appeal came on the same day CHS announced Forum has changed its name to ValleyCare Health System.
“We have to respond to the appeal in court,” said Phillip B. Dennison, a Youngstown certified public accountant and chairman of the WRHF board of trustees.
“Both foundations are adamantly trying to continue to retain those funds in the foundations. They were given to the foundations for the purpose of improving health care” in the Mahoning Valley, Dennison added.
“We’re trying to preserve as much of that money as we can to support local health-care needs,” Dennison said.
In their motions to be dismissed from bankruptcy, the foundations said they’d no longer seek to support the hospitals, now that a for-profit business owns them. Rather, the foundations said they’ll seek to improve the health status of the Youngstown-Warren community.
All debtors, including the foundations, have a duty to maximize value for the creditors, the unsecured creditors argued in a bankruptcy court hearing.
The foundations, however, said they didn’t owe the hospitals’ creditors and that the foundations should be released from bankruptcy to fully resume their charitable missions.
“TMHF and WRHF are separate and distinct nonprofit corporations, which have operated exclusively for their charitable purposes,” Judge Woods wrote in last week’s order. “No bankruptcy purpose would be served by the continuation of the bankruptcy case” of either foundation, she ruled.
The foundations primarily funded capital improvements, such as building additions and equipment at the hospitals.
The foundations said in court papers they were included in Forum’s bankruptcy filing only because the foundations had pledged their assets to the Forum hospitals’ secured creditors, namely the bondholders.
The bondholders were paid in full from proceeds of the sale of the hospitals last fall, and no foundation money was used to pay the bondholders, Dennison added.