Brooklyn Hospital Center gets court OK on reorganization plan

By Reshmi Basu

New York, Sept. 12 - The Brooklyn Hospital Center and debtor Caledonian Health Center, Inc. obtained court approval Wednesday of its joint plan of reorganization and related disclosure statement from the U.S. Bankruptcy Court for the Eastern District of New York, according to a person familiar with the case.

The effective date of the plan will be Sept. 24.

As previously reported, the plan will be funded by an exit facility, proceeds from the sale of some of the hospital's non-core assets, any recoveries from preference actions and the net cash proceeds from a warehouse fire lawsuit.

Distributions to holders of limited insurance medical malpractice claims will be made from the hospital's self-insurance trust, available insurance proceeds and cash contributions.

Treatment of creditors under the plan will include:

• Holders of priority non-tax claims will recover 100% in cash;

• Holders of DASNY 1998 secured claims and DASNY 1999 secured claims will recover 100% in either cash or reinstatement of their claims;

• Holders of other secured claims will recover 100% in either surrender of the collateral securing the claim or reinstatement of the claim;

• Holders of general unsecured claims will recover 10% to 16% in their share of a class 5 cash distribution and a share of the proceeds of the creditor trust assets;

• Holders of full insurance medical malpractice claims will recover 100% in cash from insurance policy proceeds;

• Holders of limited insurance medical malpractice claims will recover 34% through a share of a class 7 cash distribution; and

• Intercompany claims will be canceled and holders will receive no distribution under the plan.

Brooklyn Hospital said it has a commitment for $90 million in exit financing from Kimco Capital Corp.

The exit facility is comprised of a $65 million term loan facility and a $25 million revolving credit facility.

Interest on the term loan will be either Prime rate plus 175 basis points or Libor plus 325 bps, and interest on the revolver will be either Prime rate plus 100 bps or Libor plus 250 bps.

The exit facility will mature five years from closing.

The Brooklyn, N.Y.-based hospital filed for bankruptcy on Sept. 29, 2005. Its Chapter 11 case number is 05-26990.

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