Hahnemann University Hospital files bankruptcy to complete wind-down

By Caroline Salls

Pittsburgh, July 2 – Center City Healthcare, LLC, which does business as Hahnemann University Hospital, filed Chapter 11 bankruptcy Sunday in the U.S. Bankruptcy Court for the District of Delaware.

Chief restructuring officer Allen Wilen said in a statement filed with the court that the Center City debtors believe that St. Christopher’s Hospital for Children and its related physician practices are viable and valuable entities that can be preserved and reorganized through a court-supervised sale or a Chapter 11 plan.

“That is not the case for [Hahnemann] and its related physician practices, which the debtors have concluded are not viable or saleable as a going concern,” Wilen said.

“Given the bleak financial picture” for Hahnemann, Wilen said the debtors issued WARN Act notices to that hospital’s employees before the bankruptcy filing and began the process of shutting down the hospital.

Wilen said the Chapter 11 cases will be used to conduct a closure and wind-down of Hahnemann University Hospital.

In conjunction with the bankruptcy filing, Center City has obtained a commitment for $65 million in debtor-in-possession financing, plus a roll-up of its pre-bankruptcy credit facility.

The new-money financing is composed of a $50 million revolving credit facility and a $15 million term loan facility.

MidCap Financial Trust is the administrative agent.

Interest on the revolver will accrue at 30-day Libor plus 425 basis points with a 50 bps floor, and interest on the term loan will accrue at 30-day Libor plus 1,000 bps with a 50 bps floor.

The DIP facility will mature 12 months from closing.

According to court documents, Center City has $100 million to $500 million in both assets and debt.

The company’s largest unsecured creditors are Tenet Business Services Corp. of Dallas, with a $20.18 million trade debt claim; Conifer Patient Communications of St. Petersburg, Fla., with a $19.09 million trade debt claim; Drexel University of Philadelphia, with a $14.16 million trade debt claim; Medline Industries Inc. of Northfield, Ill., with a $3.96 million trade debt claim; Cemer Corp. of Kansas City, Mo., with a $3.79 million trade debt claim; NTT Data Services LLC of Plano, Tex., with a $2.54 million trade debt claim; Veolia Energy Philadelphia Inc. of Philadelphia, with a $2.42 million trade debt claim; Ensemble Room LLC of Huntersville, N.C., with a $2.22 million trade debt claim; Universal Protection SVS LP of Santa Ana, Calif., with a $1.8 million trade debt claim; and Medtronic Usa Inc. of Chicago, with a $1.77 million trade debt claim.

The company is represented in the bankruptcy cases by Saul Ewing Arnstein & Lehr LLP.

Center City is a Philadelphia-based hospital operator. The Chapter 11 case number is 19-11466.

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