A portion of a suit filed in 2009 against the trustees, officers and accounting firm for the former Bayonne Medical Center was settled in U.S. Federal Bankruptcy Court on Aug. 24 for about $10.5 million. Some of the award may go to the city of Bayonne as repayment for part of a $6 million loan given to the hospital in the months before new owners took over the facility in early 2008.
At the time, the city made the loan to cover BMC’s operating expenses when officials of the medical center said the hospital was in danger of closing.
“The relief requested in the motion is in the best interest of the estate and its creditors,” the court ruling said.
The suit was filed by Allen J. Wilen in his capacity as liquidating trustee and estate representative for the bankrupt estate of the former Bayonne Medical Center. It targeted Omni Healthcare – which was constructing a new senior care facility on land it bought from the BMC adjacent to the existing hospital – and other entities, as part of a complicated legal action in which more than 70 unpaid companies are seeking to collect as much as $50 million in unpaid bills resulting from the bankruptcy and eventual sale of the medical center.
“We are happy that some resolution has been achieved,” said Allyson Miller
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“We are happy that some resolution has been achieved,” said Allyson Miller, spokesperson for the current hospital ownership.
Omni land sale portion will likely go to trial
The court ruled that the settlement “forever releases,” the parties involved in the suit from future litigation – with one glaring exception. The portion of the suit concerning the sale of land to Omni Healthcare in December 2007 is still unresolved and will likely go to trial, officials said, and this is the reason why the Omni project has been halted.
“Wilen has refused to allow the project to move ahead until this aspect of the case has been settled,” one former trustee said.
Connell Foley, the lawyer for the former owners of the debtor hospital, is suing Omni for $5 million allegedly promised for purchase of the land and building, but not paid. The money, according to the suit, was supposed to have been paid in five $1 million installments beginning in June 2006.
But according to court records, the first $1 million installment was listed as “a loan,” not a payment, on hospital records, and was deducted from the final sale price of the $2 million Omni eventually paid.
Foley said the hospital allegedly listed the $5 million as an asset on its balance sheet even though it never received the money. Omni argued that the pledge was not binding and the company paid the hospital just over $2 million, nearly all of which went to fees concerning the sale of the former telephone building.
“The hospital received a little more than $60,000 when all was said and done,” according to one of the board trustees serving during the transition prior to the sale.
Because the matter is in litigation, Omni representatives have declined comment.
Complicating the matter even further, the suit contends that Omni gave BMC a $1 million “promissory note” bearing the apparent signatures of then-BMC President/CEO Robert H. Evans and BMC Board Chairman Herman Brockman. But in dispositions, Brockman has said the signature was not his.
Foley said he is seeking to get the bankruptcy court to restore the originally agreed upon $6 million sale price, so that some of the old debts to unsecured creditors might be paid
The matter may also be under investigation by federal authorities. Several prominent officials involved with the bankruptcy confirmed that agents of the Federal Bureau of Investigation took records shortly after the sale of the medical center in 2008 concerning previous financial dealings at Bayonne Medical Center when operated under Evans.