Interfaith Medical, Brooklyn Hospital Center negotiations approved

By Jim Witters

Wilmington, Del., March 18 - Interfaith Medical Center, Inc. won court approval to continue negotiations and due diligence on a potential business integration with the Brooklyn Hospital Center, according to debtors attorney Alan J. Lipkin.

During a March 18 hearing, the U.S. Bankruptcy Court for the Eastern District of New York also approved a 90-day extension of Interfaith's exclusive periods for filing a Chapter 11 plan and soliciting plan acceptances.

Negotiations

As previously reported, Interfaith said that completion of any transaction with Brooklyn Hospital would be conditioned upon further due diligence, the negotiation, execution and delivery of definitive agreements, confirmation of a Chapter 11 plan for Interfaith, approval by the governing boards of both entities and any required government and other court approvals.

The terms referenced in the memorandum of understanding include:

• Reorganization of Interfaith with the Brooklyn Hospital Center or its designated affiliate as new Interfaith's sole member or the transfer of Interfaith's assets to a not-for-profit successor entity that would have the Brooklyn Hospital Center or its designated affiliate as its sole member;

• The Brooklyn Hospital Center member of Interfaith would be an active parent exercising a variety of reserved powers and would appoint 60% of new Interfaith's board of trustees. The remaining 40% would be current Interfaith board members;

• The BHC Network would be formed for planning and strategic development of an integrated healthcare system in the Brooklyn marketplace; and

• A joint board and management committee would be established to review current and future clinical services at Interfaith to address how services at the two hospitals would be integrated.

Lipkin said the memorandum was approved after the non-solicitation provision was limited to approximately 30 days, with the possibility of extensions.

Exclusivity extension

The company won an extension of its exclusive filing period to July 1 from April 1 and its exclusive solicitation period to Aug. 31 from May 31.

In seeking the extensions, Interfaith said it needed the additional time because of the complexity of the cases.

Interfaith, a Brooklyn, N.Y., multi-site health care system operator, filed for bankruptcy on Dec. 2. Its Chapter 11 case number is 12-48226.

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