Bankrupt Steward Health Care pushes back bid deadline for first tranche of hospitals, physician group

June 20

Steward Health Care has bumped back several deadlines surrounding the sale of several hospitals and its physician group by three to four weeks. 

The system, which filed for bankruptcy on May 6, previously planned a bid deadline of June 24 for its first batch of assets. In a Tuesday filing in bankruptcy court, the system adjusted that date to July 15.

The shift also affects subsequent steps in the sale process for those assets—for instance, an auction previously set for June 27 will be held on or before July 18, while a sale hearing deadline of July 2 now lands at July 31. 

Deadlines for the second set of assets, which includes all of Steward's Florida hospitals and some facilities in its home state of Texas, have not been changed. These include a bid deadline of Aug. 12 and a first sale hearing on Aug. 22. 

June 11

Steward Health Care lines up $225M financing to keep hospitals afloat through bankruptcy selloff

Steward Health Care informed bankruptcy court that it has lined up another $225 million from existing lenders that will allow the system to maintain operations at its for-sale healthcare facilities.

The for-profit, which filed for bankruptcy on May 6, was reportedly days away from running out of money. The new loan is expected to keep its operations afloat through the fall, likely averting the worst-case scenario government leaders critical of the system's conduct had feared. 

In a filing seeking the bankruptcy court's signoff, Steward wrote that it believes the first-in, last-out debtor-in-possession (FILO DIP) loan "presents the best financing option available to fund these chapter 11 cases and allow [Steward] to continue [its] efforts to maximize value through [its] sale processes, while maintaining quality of patient care."

Steward would have access to $75 million of the loan immediately upon the court's signoff, with the remaining $150 million "available in draws not to exceed $50 million per draw," according to court documents outlining the potential financing's material terms. The document also lists the following FILO DIP lenders: WhiteHawk Finance LLC; Owl Creek Investments I, LLC; OneIM Fund I LP; MidOcean Credit Fund Management; Brigade Capital Management, LP.

“Securing this additional financing from a group of our secured lenders provides Steward with comprehensive financing to stabilize our operations during this bankruptcy case to the benefit of all our stakeholders, including our physicians, employees, patients and vendors,” John Castellano, Steward’s chief restructuring officer, said in a release.

Prior to the newly announced financing plan, Steward had only been able to secure $75 million of DIP financing from Medical Properties Trust, which owns the real estate of Steward's hospitals.

June 4

Bankruptcy judge greenlights Steward Health Care's asset sale timeline

The judge ruling over Steward Health Care's bankruptcy proceedings has signed off on an amended timeline for the system to sell off its 31 hospitals and other assets. 

In a hearing held Monday, U.S. Bankruptcy Judge Christopher Lopez approved a plan that sets Steward's assets into two camps with separate deadlines.

The first, which includes most of the system's hospitals and its physician group, will receive bids until June 24 and have its first sale hearing on July 11. That group contains all of Steward's assets in Massachusetts, where it runs eight hospitals and has been facing the harshest scrutiny from government leaders. 

The second set of assets, which includes all of Steward's Florida hospitals and some facilities in its home state of Texas, will have a bid deadline of Aug. 12 and a first sale hearing on Aug. 22. 

A lawyer for the U.S. Department of Justice raised concerns during the hearing that the timeline could be too swift to allow for a full regulatory review of Steward's planned sale of its physician group to UnitedHealth Group's Optum. That concern also led the department to file an objection late last week (see below). 

Also on Monday, Lopez approved an emergency motion that was filed Friday which will allow Steward to offer financial incentives to third-party lenders. This would include a commitment fee of up to $6.75 million and other reimbursed expenses.

Steward is seeking $225 million or more to keep its operations afloat until new owners take control of its assets after Medical Properties Trust, Steward's landlord, signed off on $75 million of debtor-in-possession financing last month.  

May 30

DOJ files objection to Steward Health Care's bankruptcy proceedings

The feds have raised an objection about Steward Health Care's planned bankruptcy proceedings, seeking additional time to investigate the health system's planned sale of its assets.

In particular, the Department of Justice is concerned about the sale of its physician group to UnitedHealth Group's Optum, according to court filings. Principal Deputy Assistant Attorney General Brian Boynton argues in the documents that Steward has set an "aggressive" schedule for pushing the sale through that could make it harder for the agency to review the deal.

Steward reached a potential deal to sell its physician assets to Optum shortly before it announced plans to file for bankruptcy earlier this month. The "stalking horse" deal would essentially serve as an initial bid on Steward's assets that can set the bar for other buyers.

Boynton said the federal government told Steward it intended to review the deal once it was announced.

"Regardless of the milestones, or any default triggered by failure to meet the milestones, the United States’ antitrust review, or review of any transaction under the Clayton Act, must be permitted to reach a conclusion and the Debtors cannot consummate a sale until the review concludes," he wrote in the filing, dated May 28.

Steward officially filed for bankruptcy May 6, saying taking that step was critical for the system to keep the doors open as it navigates significant debts and unpaid bills. It is also working with Medical Properties Trust on a debtor-in-financing arrangement that will provide an initial $75 million.

All of its hospitals are up for sale as it navigates the bankruptcy process, and Steward said it does not expect any of its facilities to close.