HOBOKEN – The parties involved in the bankruptcy of Hoboken University Medical Center’s operator are due back in court on Thursday afternoon, and will be presented with a $10.2 million settlement agreement on approximately $34 million in claims. Mayor Dawn Zimmer issued a statement on Wednesday saying that if the settlement agreement is not approved on Thursday, the hospital will be forced to close.
The Hoboken Municipal Hospital Authority, a city board, is in the process of selling the hospital to HUMC Holdco, an ownership group from Bayonne Medical Center.
In order for the sale to be completed, the claims must be settled. Zimmer said that if the sale to Holdco falls through, the hospital will close because there is not enough time to complete negotiations again.
The ownership group from Jersey City Medical Center made their bid public last week, and a representative from the group said they could take over the hospital if the current deal collapses. However, Zimmer questioned their financing plan last week when the bid became public. To read about the JCMC bid and that of another bidder, click HERE.
The bankruptcy settlement received state attention after Gov. Christopher Christie pledged $5 million of coveted state money to contribute to the settlement. Holdco spent approximately $350,000 lobbying Democratic and Republican politicians over the past two years, according to a report in The Star Ledger. Their efforts have included a $25,000 donation to a political action committee that supports Christie.
Mayor Dawn Zimmer had asked the City Council for $5 million of city money to contribute to the settlement in September, but her council foes rejected her request. After the vote, Zimmer said the hospital would be forced to close. However, Christie committed the state money, which Zimmer said “breathed life” into the hospital.
Zimmer issued an updated statement on Wednesday.
“HUMC has been running on fumes to reach this point, and cannot survive further delays,” Zimmer said. “A hearing is scheduled in Bankruptcy Court tomorrow (Oct. 6). This hearing has been postponed several times in order to facilitate ongoing negotiations, but there is no longer any flexibility in the remaining timeline. The committee has been advised that it must accept the settlement agreement by early this afternoon (today), which is the only way tomorrow’s hearing will go forward. If the settlement agreement and hospital sale are not approved at tomorrow’s hearing, the Hospital Authority will be compelled to take immediate steps to close the hospital to ensure the safety of its patients.”
If the hospital were to close, Zimmer said in her statement that the result would be “virtually no distribution to unsecured creditors, the elimination of over 1,100 jobs and the loss of critical healthcare services to the residents of Hoboken and surrounding communities.”
“The settlement agreement offers unsecured creditors far more than would be otherwise available, while saving HUMC and relieving Hoboken’s taxpayers of a burdensome $52 million bond guaranty,” Zimmer said. “Despite the repeated delays, I remain hopeful that we will be able to successfully complete this transaction since it provides the only acceptable alternative for all of the parties involved.”
For the outcome of the proposed settlement and the vote of the creditors committee, keep reading HudsonReporter.com. — Ray Smith
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