Hahnemann University Hospital: Healthcare Bankruptcy Highlights the Tension When Private Equity Collides with the Public Interest
A “little bit of a crisis” was averted last week in the Chapter 11 bankruptcy case of St. Christopher’s Hospital for Children, a Philadelphia-area hospital with ties to Hahnemann University Hospital, which is also a Chapter 11 debtor. On Tuesday, Delaware bankruptcy judge Kevin Gross said he could not approve a $65 million DIP loan requested by St. Christopher’s over the objection of several creditor groups because the terms of the loan were too onerous. The failure to obtain the much-needed liquidity might have forced the hospital into a chaotic, freefall liquidation, potentially jeopardizing patients and most certainly spelling disaster for creditor recoveries. But by Wednesday, after last-minute negotiations between the Debtor and the DIP Lender, MidCap Financial Trust, the parties reached a deal that increased the cash infusion to the estate. Later that same day, Judge Gross said he would approve the revised loan package. The funding is expected to keep St. Christopher’s open long enough to conclude a sale of the hospital as a going concern.