Plans for Hawaii Medical Center down to 2
BY Greg Wiles
Advertiser Staff Writer
A fight over how to bring Hawaii Medical Center out of bankruptcy and repay its debts has narrowed to two plans that pit owners and unsecured creditors against a healthcare group run by Franciscan nuns.
The owners and unsecured creditors yesterday announced they had joined forces to come up with a plan of reorganization for Hawaii Medical Center, which operates the former St. Francis hospitals in Liliha and 'Ewa.
The joint plan calls for turning Hawaii Medical Center East and Hawaii Medical Center West into not-for-profit hospitals while proposing to fully repay creditors. At the same time the plan calls for a review of what is owed St. Francis Healthcare System of Hawaii as a result of the sale, with the possibility of reducing the amount.
"We believe the joint reorganization plan is the best option for Hawaii Medical Center," Salim Hasham, HMC's chief operations and restructuring officer, said in a press statement issued yesterday.
The new plan includes the exit of Dr. Badr Idbeis from the board of directors. Idbeis is a heart surgeon who led Kansas-based Cardiovascular Hospitals of America's purchase of the St. Francis hospitals in January 2007 with the help of 132 local physicians.
The new owners had relied on $46.3 million of seller financing from St. Francis Healthcare to pull off the transaction but were unable to turn around the financially strapped hospitals. In August 2008 it filed for a Chapter 11 bankruptcy organization.
Until this week there had been three reorganization proposals to be considered by the court — one put forth by the owners, another by the unsecured creditors and the third by St. Francis.
St. Francis' plan calls for taking back the hospitals, finding new managers for the operation and giving unsecured creditors 10-year promissory notes. That left the current owners without anything to show for their investment and included the possibility that unsecured creditors might not receive all they were owed.
Yesterday, St. Francis declined comment on the owners and creditors' joint plan, saying it was still reviewing the 102-page disclosure statement.
In the past it has criticized the other plans, saying they hadn't showed they could satisfy what's owed St. Francis.
HMC said it can proceed with the conversion to a nonprofit without the bankruptcy court's approval. The change can be done by getting approval from the current board, which then would be dissolved and a new board appointed, said HMC spokeswoman Kris Tanahara.
She said a court hearing deciding which plan will go forward is still set for the end of May.