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Steward Health Care landlords fire back at hospital operator over delays in sale
Tennessee

Steward Health Care landlords fire back at hospital operator over delays in sale

Steward Health Care’s landlords are fighting back in court after the hospital operator accused them of obstructing their efforts to transfer their healthcare facilities to new owners.

Dallas-based Steward told a South Texas district bankruptcy court on Monday that Medical Properties Trust had placed itself between it and potential bidders for its 31 hospital properties and that the property owners had exerted pressure to increase the value of shares in the properties owned by the hospitals.

However, according to lawyers for Medical Properties Trust, Steward’s inability to find bidders or negotiate favorable terms for the sale of its hospitals is the fault of the healthcare provider, not the company from which it leases the buildings.

“It is reasonable to assume that the debtors will attack MPT and attempt to blame MPT for the poor performance of these cases and the delays in the sale process,” the lawyers wrote. “Not only is this portrayal legally irrelevant – it does not change the fact that the debtors are tenants whose rights are governed by Section 365 of the Bankruptcy Code – but it is also fundamentally incorrect.”

“In reality, it is the debtors who have prevented the sales, not to protect public health or anything like that, but to force MPT to transfer the property value to the debtors and their lenders as the price for allowing the sales necessary to avoid closures to take place,” they added.

According to Steward’s lawyers, MPT “attempted to undermine the sales process” by communicating with companies that might submit offers for Steward properties without the health care operator’s written consent.

According to Steward’s lawyers, MPT advises bidders to “allocate the entire value of their bids to MPT’s properties.” In addition, MPT, Steward said through his legal team, is trying to “pressure” Steward to “transfer the entire value” of the hospitals to their landlords.

Steward has asked Federal Bankruptcy Judge Christopher Lopez to “enter into force an order allocating the value of the hospital operations and other assets on the one hand and the hospital real estate on the other.”

Steward, which filed for Chapter 11 bankruptcy in May, operates eight hospitals in Massachusetts.

Governor Maura Healey announced last week that the state would take over St. Elizabeth’s Hospital in Brighton through expropriation until it could be combined with Good Samaritan Medical Center in Brockton to form Boston Medical Center.

Other sales agreements announced Friday would see Lawrence General Hospital acquire Holy Family Hospital’s locations in Haverhill and Methuen. Rhode Island-based Lifespan System would buy Morton Hospital in Taunton and St. Anne’s Hospital in Fall River.

Two of Steward’s hospitals, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, were not sold and are instead scheduled to close at the end of August.

It should be noted that none of the sales have been completed yet, MPT’s lawyers told the court, and that they are not the ones standing in the way of that.

“As of this filing, the debtors have not yet received approval for a hospital sale and they have repeatedly delayed the sale process. As the debtors admitted in court on July 31, they are ‘holding up’ the sale despite the risks involved because they want more money than the bidders have offered for the hospital operations,” MPT’s lawyers wrote.

Steward’s request to the judge that the healthcare company be allowed to include the land sold to MPT in its sales offers was also not part of the deal, MPT said.

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