(Bloomberg) — Steward Health Care System LLC filed for bankruptcy Monday morning as it finalizes a bailout loan with owner Medical Properties Trust Inc.
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The Massachusetts-based company filed for Chapter 11 protection in the Southern District of Texas and listed assets and liabilities of between $1 billion and $10 billion. The bankruptcy filing allows Steward Health to continue operating while it seeks approval for a restructuring plan.
The company, which operates 33 community hospitals in nine US states and employs more than 30,000 people, has struggled with cash flow in recent months.
As part of the restructuring agreement, Medical Properties – a US real estate trust focused on healthcare facilities – is expected to provide upfront debtor-in-possession financing in the amount of $75 million and an additional loan of up to $225 million if certain conditions are met. met, he said in a statement. In January, Medical Properties gave Steward Health a $60 million bridge loan and deferred a portion of its rent arrears.
Medical Properties fell 18% in pre-market trading to $4 as of 6:30 a.m. New York time.
Steward Health CEO Ralph de la Torre cited higher costs and “insufficient reimbursement by government payers” among the factors leading to the Chapter 11 filing. The delay in selling his unit physician business, Stewardship Health, forced him to seek another source of funding.
As part of the bankruptcy process, “Steward will be better positioned to responsibly transfer ownership of its Massachusetts-based hospitals, keep all of its hospitals open to treat patients and ensure continuity of care and services for our patients and of our communities,” de la Torre said. .
The case is Steward Health Care Holdings LLC, 24-90212, U.S. Bankruptcy Court for the Southern District of Texas.
–With help from Bre Bradham.
(Updates with Medical Properties’ premarket stock price in fifth paragraph.)
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