St. Francis sisters to file HMC bankruptcy plan

A federal judge in Honolulu on July 13 denied the Hawaii Medical Center’s request to extend an exclusivity period beyond July 15, which means other parties will soon be able to file reorganization plans for the bankrupt hospital system. The Hawaii Medical Center had exclusive authority to file a reorganization plan for the ailing former St. Francis hospitals. The center submitted its plan on March 30.

The decision “opens the door for us to put together and submit our own plan, which will be beneficial for the other creditors, the community and our health care system," said Sister Agnelle Ching, chief executive of the nonprofit St. Francis Healthcare System of Hawaii.

HMC lost $552,000 in May, running its losses to $5.5 million since filing for Chapter 11 bankruptcy on Aug. 29, 2008, according to its most recent monthly operating report filed with U.S. Bankruptcy Court. HMC West in Ewa Beach earned $366,000 during the month, but HMC East in Liliha lost $918,000. Total revenue for the company during the month was $12.3 million while total expenses were almost $13 million.

In denying the extension request, U.S. Bankruptcy Court Judge Robert Faris said this will help bring the bankruptcy to a successful conclusion. Creditors will vote to approve or reject HMC’s plan sometime after a hearing scheduled for Aug. 3.

Officials at Hawaii Medical Center filed for Chapter 11 bankruptcy last August. HMC bought the struggling former St. Francis hospitals in Ewa and Liliha more than two years ago for $68 million and began converting the two not-for-profit hospitals into for-profit facilities. They have since said they paid too much and want a do-over of the deal.

St. Francis Healthcare System of Hawaii, the Roman Catholic religious order which provided most of the financing in the January 2007 sale, and other creditors have objected to HMC’s plan. St. Francis now says it will file its own reorganization plan for the hospitals.