Language in the original disclosure document noted that in the course of its investigation the creditors committee discovered evidence of negligence, errors in judgement, misleading or erroneous statements, and other breaches of fiduciary duty by the officers and directors of SPMH. Such claims include mismanagement of hospital operations, under-funding of the pension fund, waste and or misuse of the endowment, and negligent supervision of the management company Quorum Health Services, among other claims.Language now includes that SPMH directors “disputes these allegations” and that a $10 million claim for damages would be pursued only in the event that net plan proceeds are insufficient to pay the claims of creditors in full. The revision also has a list of claims, including one for $398,070 to Quorum, of which the debtor is investigating whether or not there is any basis for objection.Scheduled and filed claims – including $12 million by an individual that will likely be rejected by the court – top $29 million. The whittled down list of the likely outcome of debts is about $11.5 million, not including administrative or subordinated claims, including professional fees.Among the filed listings is a $1.4 million discrepancy with SPMH’s books and records – the likely outcome is listed as $1.1 million plus or minus – the IRS ($268,939 expected to be whittled down), and the Employment Development Department ($1.5 million, also expected to be adjusted). Waiting in the wings is Comstock Homes, which offered $13.1 million for 16 acres of hilltop hospital property in a creditors auction.SPMH opened in 1961, one of only three community built hospitals in the state. It closed on December 19, 2003 and directors filed for bankruptcy three days later.
SPMH: Bankruptcy judge’s ruling on disclosure statement expected Tuesday
January 26, 2005
Santa Paula News
The next step in the bankruptcy proceeding for Santa Paula Memorial Hospital will be Tuesday, when the attorney for the creditors will ask Judge Robin Riblet to rule that an accompanying disclosure document has adequate information.
By Peggy KellySanta Paula TimesThe next step in the bankruptcy proceeding for Santa Paula Memorial Hospital will be Tuesday, when the attorney for the creditors will ask Judge Robin Riblet to rule that an accompanying disclosure document has adequate information. If so, the plan will be submitted to a vote of more than 450 creditors, said attorney Alan Stomel.The hearing will be held at 11 a.m. on February 2 at 1415 State Street, Courtroom 201, Santa Barbara. The plan – which has not been endorsed by SPMH directors - could garner court approval by late March.Stomel and the directors’ attorney submitted revisions to the disclosure document, including adding language about the failed negotiations with the County of Ventura – the county has offered $2.75 million for the hospital campus – noting that during the negotiations SPMH contends that the county acted unreasonably and significantly delayed the negotiations, including unreasonable demands, also charges made against SPMH directors. Language also removed notes that the community “learned for the first time” on December 20, 2002 that SPMH was at the “edge of a precipice” financially, and without an infusion of funds within 90 days SPMH would be forced to permanently close its doors.“The debtor maintains that it was generally known from mid-1990s that the hospital’s financial condition was precarious,” is added language. Also added is that the sale agreement with the county does not include a provision that mandates that the county open a general care hospital or operate an emergency room or, if opened, to keep them open for any length of time.The committee believes that such a provision is “unreasonable and unrealistic,” and the offer of purchase and history of providing healthcare demonstrate the county’s commitment.
