Steward Health Cleared For Arkansas Hospital Sale In Ch. 11

Bankrupt hospital operator Steward Health Care Systems received a Texas bankruptcy judge’s seal of approval to sell an Arkansas hospital for $200,000. 

During a hearing Thursday, U.S. Bankruptcy Judge Christopher M. Lopez said he would sign off on the sale of Wadley Regional Medical Center, a 79-bed hospital located in Hope, Arkansas, to Pafford Health Systems Inc., which offers emergency and other medical services in four states in the Southeast. Pafford agreed to pay Steward $200,000 for the facility and cover payroll retroactively to Sept. 1, Stephanie N. Morrison of Weil Gotshal & Manges LLP, representing the debtor, said at the hearing. 

“This proposed transaction aligns with the debtor's goal of keeping hospitals open,” Morrison added at the hearing, noting that the sale motion was unopposed. 

Hospital operator Steward filed for bankruptcy in May, reporting $7.8 billion of liabilities, including some $6.6 billion in long-term lease obligations for its hospitals in eight states. In the months before its Chapter 11 petition, the Texas-based hospital operator had been under fire in media reports and from Massachusetts lawmakers who raised concerns over the financial health of Steward and the prospects of the then 31 hospitals it operated. 

While in bankruptcy, Steward has closed two hospitals and sold a number of others. 

Steward made big strides forward in its Chapter 11 case earlier this week when Judge Lopez approved a global settlement between the debtor; its official committee of unsecured creditors; and its landlord, Medical Properties Trust.

Under the agreement, MPT will fund operations at 20 hospitals while Steward looks for buyers, allowing Steward to save estate resources and keep facilities open during its bankruptcy. The deal also provides for mutual claim releases between the debtor, MPT and the committee, including the landlord’s lease claims. 

Steward is represented by Weil Gotshal & Manges LLP. 

The bankruptcy is In re: Steward Health Care System LLC, case number 24-bk-90213, in the U.S. Bankruptcy Court for the Southern District of Texas.

—Editing by Abbie Sarfo and Alyssa Miller.