Victory Memorial inks deal to reduce PBGC claim by $22.72 million

By Caroline Salls

Pittsburgh, Sept. 29 - Victory Memorial Hospital requested court approval of a settlement that reduces a Pension Benefit Guaranty Corp. secured claim to $5.8 million from $28.52 million, according to a Friday filing with the U.S. Bankruptcy Court for the Eastern District of New York.

According to the motion, the PBGC claim stems from an agreement under which Victory Memorial agreed to make payments to the PBGC over a 20-year period, with the payment secured by a mortgage for the hospital's Brooklyn, N.Y., property.

Victory Memorial said the PBGC claim was overstated and that the lien granted under the mortgage was avoidable as a preferential transfer.

Under the settlement, the $5.8 million secured claim must be paid within three business days of the effective date of Victory's plan of reorganization.

If objections are filed, a hearing will be held Nov. 19.

Victory Memorial, a Brooklyn, N.Y.-based hospital, filed for bankruptcy on Nov. 15, 2006. Its Chapter 11 case number is 06-44387.

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