Bankrupt Steward Health Putting All Of Its Hospitals Up For Sale, Owes $6.6B In Rent
Selling all of its assets is the plan for Dallas-based hospital operator Steward Health Care System as it moves through one of the largest hospital bankruptcies in U.S. history.
Steward, which filed for Chapter 11 protection on Monday in the Southern District of Texas, hopes to address its $9B in liabilities by putting all of its 31 hospitals across eight states up for sale, attorneys for the company said at a hearing Tuesday, according to multiple outlets.
Of its total liabilities, Steward owes $6.6B in long-term rent obligations, the vast majority of which is owed to its landlord Medical Properties Trust.
MPT, the largest U.S. hospital landlord, has come under scrutiny from state and federal lawmakers for its business model of buying hospital properties, leasing them back to operators and then lending them money when they can’t pay the full rent.
Steward is MPT’s largest tenant, accounting for about a third of its total properties. Steward hopes that through the sales, its hospitals will remain open. Steward operates facilities in Arizona, Arkansas, Florida, Louisiana, Massachusetts, Ohio, Pennsylvania and Texas.
On Tuesday, the judge overseeing Steward's case approved $75M of debtor-in-possession financing from MPT to fund the hospital group's operations. Another $225M loan from the landlord is expected later in the bankruptcy proceedings.
The auction of Steward's hospitals outside Florida is scheduled for June 28, and the sale of the nine Florida hospitals is slated for July 30 — dates that were agreed to as part of MPT's $75M loan, Steward's attorney said during the hearing.
Bankruptcy Judge Chris Lopez barred any sale before June 3 after lawyers for Steward's other creditors took issue with MPT's influence, calling the move a “a land grab,” CoStar reported.
Steward also owes $1.2B in loans, $1B in unpaid bills from medical vendors and suppliers, and $290M in unpaid employee wages and benefits, according to CNN.
Ray Schrock, an attorney from Weil, Gotshal & Manges, which is representing Steward, told the court the hospital sales could be pushed to a later date.
“What we don’t want to do is have a fire sale of the assets,” Schrock said, according to CNN. “There is a lot of value here.”
Steward has 30,000 employees and operates hundreds of medical offices and clinics, which haven't been put up for sale. It serves 2.2 million patients nationwide and had $6B in annual revenue before filing for bankruptcy as it was running out of cash, Schrock said at the hearing.
