Cut the ties that bind

Cut the ties that bind

But for an ill-advised decision years ago by trustees for two charitable trusts to allow foundation assets to be used as collateral for Forum Health building programs, $12 million in Mahoning Valley charitable funds would never have been tied up in U.S. Bankruptcy.

Unfortunately, Western Reserve Health Foundation, which supported Northside Medical Center in Youngstown, and the Trumbull Memorial Hospital Foundation, which supported TMH in Warren, did allow their assets to be pledged as collateral to help Forum get financing for capital improvements. But those foundation funds never belonged to Forum Health, or North Side Medical Center or Trumbull Memorial Hospital. The foundations allowed the money to be used by Forum for a limited purpose.

Time to move on

Now that the holders of the bonds for which the foundation money was pledged as collateral have been satisfied through the sale of Forum Health to Community Health Systems, the foundations should be free to pursue a legitimate charitable use for those funds. It’s a use that must yet be defined, because the not-for-profit hospitals they were established to support no longer exist.

Nonetheless, the unsecured creditors in Forum’s bankruptcy have been assiduously attempting to lay claim to the foundation money.

The bankruptcy court spoke quickly and emphatically to the issue. U.S. Bankruptcy Judge Kay Woods wrote: “Unrestricted funds held by TMHF and WRHF cannot be used to pay the creditors of other debtors.” The other debtors in this case would include Forum Health.

Now the creditors have taken their appeal to another venue, the U.S. District Court. The court should not only reject the appeal, but should order the plaintiffs to pay any legal expenses the foundations incur while protecting their charitable assets from the grasp of unsecured creditors.