Bankrupt well being system Prospect Medical Holdings Inc. gained courtroom approval at hand operations of its Pennsylvania hospitals to a state-backed receiver, a final minute deal that averts potential closures of important well being facilities.
The settlement accredited Thursday by Decide Stacey Jernigan transfers operation of the hospitals from Prospect to advisory agency FTI Consulting Inc., which has been tapped by Pennsylvania Legal professional Common Dave Sunday as a non-public trustee to supervise hospitals within the state. Prospect is dealing with “dire liquidity” issues and the deal is a brief measure that may maintain the hospitals open whereas Prospect searches for brand new homeowners, Jernigan stated.
“We’ve bought to maintain these amenities open, in some way,” the choose stated.
The settlement with state authorities got here collectively after a proposed sale of the Pennsylvania hospitals to a nonprofit group was paused. FTI will even oversee $20 million in funding to help the hospitals which is scheduled to return within the coming weeks, Prospect lawyer Thomas Califano stated throughout Thursday’s courtroom listening to.
Pennsylvania authorities final 12 months sued Prospect and its non-public fairness investor Leonard Inexperienced and Companions. The lawsuit claims Prospect distributed $457 million in dividends to traders via a $1.12 billion mortgage.
The grievance additionally criticized the sale of Prospect’s properties in California, Connecticut and Pennsylvania to landlord Medical Properties Belief Inc., which leased the amenities again to firm. The leases saddled Prospect with extreme lease liabilities, the lawsuit alleged.
Prospect filed for Chapter 11 in January, changing into at the very least the third well being system to hunt courtroom safety prior to now two years. Former Medical Properties Belief tenant Steward Well being filed for Chapter 11 final 12 months and likewise needed to strike a collection of rescue offers to maintain its hospitals from closing.
Leonard Inexperienced and Companions’ possession of Prospect Medical has been criticized by members of Congress. A bipartisan Senate report launched earlier this month stated the non-public fairness agency “wielded substantial affect” over Prospect’s monetary choices and that whereas it was proprietor of the hospital operator, it collected $424 million of the $645 million the corporate paid out in dividends and most popular inventory redemptions.
The case is Prospect Medical Holdings, Inc., 25-80002, within the U.S. Chapter Courtroom Northern District of Texas.
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