Interfaith Medical Center second amended plan effective as of June 19

By Caroline Salls

Pittsburgh, June 20 – Interfaith Medical Center, Inc.’s second amended plan of reorganization took effect on Thursday, according to a Friday filing with the U.S. Bankruptcy Court for the Eastern District of New York.

The plan was confirmed on June 11.

As previously reported, the medical center said the plan calls for the satisfaction of the Dormitory Authority of the State of New York’s claims through the transfer to Dasny’s designee of specified real property and real property leases, which will primarily be leased to the reorganized debtor, and the retention by reorganized Interfaith of its operating assets, which will then be used to provide health care in its community.

The plan also calls for the formation of a liquidating trust, which will receive, liquidate and distribute the proceeds from some assets to specified creditors.

On June 13, Charles M. Berk was appointed to act as liquidating trustee. Berk is a managing director and corporate recovery services co-practice leader for the New York office of CBIZ, Inc. which is the financial adviser for the company.

Plan terms

Specific terms of the second amended plan include the following:

• All administrative claims, priority claims and priority tax claims will be paid in full in cash;

• Holders of non-Dasny secured claims will receive, at Interfaith’s option, either the collateral securing the claim or payment in full;

• The Dasny claims will be satisfied in full by the conveyance of specified assets. Dasny will also receive releases provided for in the plan;

• In full satisfaction of East Building claims, if 1545 Atlantic Development LLC voted to accept the plan, it will receive $4.03 million paid by Interfaith before its bankruptcy filing, a $500,000 security deposit, $350,000 paid through May 31, revised from $300,000 paid through March 31, $25,000 per month for the period of June 1, amended from April 1, through March 31, 2015 and a $5 million general unsecured claim.

If 1545 Atlantic did not vote to accept the plan, it will receive the $4.03 million payment, the security deposit, the $350,000 payment for the period through May 31, payments in amounts and at times determined by the court as adequate protection for any leasehold interest or in connection with its rights under a subordination agreement with Dasny and a general unsecured claim in an amount to be determined by the court.

Under the second amended plan, pending resolution of 1545 Atlantic’s claims and rights, the company or reorganized company will continue to pay 1545 Atlantic $25,000 per month to be applied to any amounts determined by the bankruptcy court to be due or paid by reorganized Interfaith or to be paid to the extent no such payments to 1545 Atlantic are required.

Interfaith’s causes of action and other rights concerning the East Building will be assigned to a disbursing trustee;

• Holders of general unsecured claims will receive rights to a distribution from the liquidating trust;

• Holders of pre-bankruptcy medical malpractice claims will be treated as general unsecured creditors. However, those who also hold medical malpractice claims against covered persons, not including the debtor, also will receive a share of a separate fund to be comprised of contributions from covered medical staff; and

• Holders of existing equity interests will not receive any distribution under the plan.

Interfaith, a Brooklyn, N.Y., multi-site health-care system operator, filed for bankruptcy on Dec. 2, 2012. Its Chapter 11 case number is 12-48226.

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