Bankruptcy Proceedings Not Expected To Delay Hospital Sale

As Hoboken awaits whether the state health commissioner will allow the sale of the Hoboken University Medical Center, the hospital's management company will spend the coming months completing bankruptcy proceedings.

But the bankruptcy of Hudson Healthcare Inc. should not hold up the sale of the hospital, said chairwoman of the Hoboken Municipal Hospital Authority Toni Tomarazzo. An agreement between HHI and its creditors will have to be worked out, she said, "but we are proceeding with the closing plan."

The sale of the hospital to potential buyer HUMC Holdco LLC was

HHI was created as the not-for-profit management company of the hospital and hired by the Hospital Authority. If the sale of the hospital to potential buyer HUMC Holdco LLC is approved, the hospital authority as well as HHI will be dismantled.

Tomarazzo said she expects to close the sale of the hospital mid- to late September. HHI will take longer to settle the bankruptcy and deal with all its creditors.

A list of the top 20 creditors on the HHI bankruptcy petition, includes a $2,5 million debt to PSE&G; roughly $1 million to the Hoboken Parking Authority; about $903,000 to the City of Hoboken and close to $500,000 to Horizon Blue Cross Blue Shield.

HHI has between one and five thousand creditors, according to the bankruptcy filing, and estimated liabilities can range anywhere from $10 million and $50 million.

The HUMC has been in bad financial shape for years. In 2008 the city saved the hospital from closing with a $52 million bond.

Vincent Riccitelli, CEO of HHI and , said that the bankruptcy does not impact the hospital employees' salaries, which will be paid in full.

"There are people," Tomarazzo said about the bankruptcy, "who think that this is a deceitful thing to do."

"Bankruptcy in the United States is legal," she continued, "it's a strategy employed in the business world."

When asked if HHI filed for bankruptcy as an incentive for the potential buyers of the hospital, Riccitelli said it wasn't. He added that Holdco wouldn't have had to take on the hospital's outstanding bills and other debt any way.

"This bankruptcy will not affect this deal," Riccitelli said.

Holdco, the potential buyer of HUMC, previously bought the Bayonne Medical Center. Holdco is currently managing the Bayonne hospital in a sale-lease back construction. The same will happen after the Holdco takes over the Hoboken hospital. An Alabama based real estate company already released that it bought the HUMC property from Holdco for $70 million, according to a recent article in the Jersey Journal.

Tomarazzo, however, said the property is still in hands of the Hospital Authority.