The sale of Hoboken University Medical Center to a private company took a major leap toward the finish line on Thursday when a U.S. Bankruptcy Court judge approved a settlement between the hospital’s operator and companies who are owed money.
The agreement between Hudson Healthcare Inc. and the creditors is for $10.2 million on approximately $34 million in claims. The settlement means that creditors, including local vendors, will receive approximately 30 percent of what they are owed.
The settlement paves the way for the sale of the city-owned hospital to HUMC Holdco, a group that co-owns Bayonne Medical Center. The bankruptcy had to be settled before the sale could be completed.
The settlement paves the way for the sale of the city-owned hospital.
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“This approval by the creditors committee is a major milestone for everyone who’s been working for the past few months to bring this transaction to a positive conclusion,” said Hoboken Mayor Dawn Zimmer in a statement.
The City Council voted to guarantee $52 million in bonds to prevent the financially-ailing hospital from closing in 2007, but a major goal of Zimmer’s administration has been to relieve the taxpayers of the bond guarantee by selling the hospital to a private owner and to keep the facility as an acute care hospital.
The nurse’s union JNESO filed the lone objection to the settlement agreement. Zimmer disagreed with the objection, noting that 285 of the 314 JNESO employees that applied for jobs have already been offered positions under the new ownership. The union withdrew their objection on Thursday evening.
Virginia Treacy, the executive director of JNESO, denied that filing an objection was an attempt to “derail the sale,” stating that the union’s intent was to hold the city accountable.
Philip Schaengold, the chief transition officer for HUMC Holdco, issued a statement on behalf of the new owners following the creditor’s agreement.
“This decision is in the best interests of the citizens and city of Hoboken, the hospital’s employees, local physicians, and the state of New Jersey,” he said. “HUMC Holdco’s ownership team is extremely proud to keep the doors open at the oldest hospital in the state and remains dedicated to making investments in HUMC’s future.”
The only obstacle left to the sale is to obtain the approval of the state Commissioner of Health in the form of a Certificate of Need. The sale was unanimously approved in early August by the state health Planning Board.
State taxpayers will foot some of the bill for the settlement. Gov. Christopher Christie pledged $5 million of state money to pitch in to help pay the creditors in order for the sale to be approved. The announcement was made the day after Zimmer’s council foes refused to chip in $5 million of city money for a settlement. Zimmer had told the council the hospital would close if they did not approve the money.
The city will also receive an additional $11 million of state money to help extinguish the bond guarantee after Assemblyman Ruben J. Ramos Jr. (D-Hoboken) sponsored an earmark in the otherwise depleted state budget.
Ray Smith may be reached at RSmith@hudsonreporter.com