ELLWOOD CITY -- With two companies still battling to gain final control of the former Ellwood City Medical Center, a final determination likely is about to be made -- possibly before the end of the week.
A ruling could come as soon as Wednesday afternoon after a telephone conference hearing in U.S. Bankruptcy Court Eastern Kentucky District concludes on arguments about whose offer makes the most sense for Americore Holdings LLC debtors. A possible sale of St. Alexius Hospital in St. Louis, Mo., also could be approved.
No decisions had been released by The Ledger’s print deadline Wednesday.
The front runner to obtain the Pershing Street hospital appears to be California-based Pelorus Equity Group Inc., which now holds the mortgage on the property after buying it on July 10 from South Carolina-based Penn Med LLC. It is the largest debt holder on the Ellwood CIty Medical Center Real Estate LLC’s assets, owed nearly $10 million.
Pelorus’ claim has been bolstered after a settlement it reached with Carol Fox, court-appointed trustee for Americore assets in the case, was approved by the court last Thursday.
Under the settlement, Pelorus has agreed not interfere in Fox’s proposed sale of St. Alexius to SA Hospital Acquisition for $18.55 million in exchange for payment of its $9.31 million secured debt in the St. Louis hospital being paid through sale proceeds
In addition, Pelorus offered a credit bid of $587,477 for all Ellwood City Medical Center Operations accounts and accounts receivable and a minimum of $2.53 million for all assets of Ellwood City Medical Center Real Estate with an option to increase its credit bid if a higher offer is received. The company holds secured claims of $4.09 million and $5.67 million on Ellwood City assets.
Pelorus also said it would make a cash payment of $232,707 for contracts and leases and other assets of the hospital’s operation. The company would become the custodian of medical center medical records. The former Ellwood City Hospital has been closed since December and lost it’s license from the state health department in January.
The legal documents don’t reveal what plans Pelorus, a real estate lending firm heavily invested in the cannabis market, would have for the hospital property if it’s offer is chosen by the court. Efforts to contact Pelorus officials and Fox haven’t been returned to The Ledger.
However, another firm has made a offer that includes the medical center. Michael E. Lewitt of Third Friday Management LLC offered to waive the debt he said Americore owed him, pay 100 percent of the debt of secured claimants and set up a $22 million fund to pay unsecured creditors if given possession of all Americore assets. Lewitt has previously told The Ledger that his plan would be to reopen the medical center.
Several debtors and the Pennsylvania Department of Health and Human Services have filed objections to the First Friday plan, saying there is not enough financial information provided in the filing to determine the reliability of the offer.
But an attorney for the borough of Ellwood City, which is owed at least $354,052 in unpaid electric and sewage fees, plus attorneys’ fees, and $201,184 in property taxes for 2019 and 2020, filed an objection this week defending Third Friday.
Attorney R. Aaron Hostettler argued against the sale of St. Alexius when the Third Friday plan would provide more money for debtors. He said it is unfair to penalize the Florida company for information it doesn’t have access to because of poor management under former Americore CEO Grant White. White, who acquired the former Ellwood City Hospital in October 2016, stepped down from Americore management in February, less than two months after he filed for Chapter 11 protection on Dec. 31.
Hostettler said there is no harm in approving the Third Friday plan because it contains a deadline for funding to be provided. He said if the company is unsuccessful, the court then can go ahead with the sale.
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Control of Ellwood hospital could be decided this week - Ellwood City Ledger
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