Monroe Hospital bankrupt, to sell assets to Prime Healthcare affiliate

By Caroline Salls

Pittsburgh, Aug. 12 – Monroe Hospital, LLC filed Chapter 11 bankruptcy on Aug. 8 in the U.S. Bankruptcy Court for the Southern District of Indiana amid plans to sell its assets and operations to an affiliate of Prime Healthcare Services, Inc.

According to a statement filed with the court by president and chief executive officer Joseph Roche, Monroe Hospital was suffering from insufficient cash flow as a result of low patient census and high expenses.

As a result of the insufficient revenue, Roche said the company defaulted on its 2009 lease and loan agreement. A total of $121.75 million is owed under the lease and loan agreements with MPT Bloomington, LLC and MPT Development Services, Inc.

In connection with the bankruptcy filing, MPT agreed to provide $5 million in debtor-in-possession financing and consented to the use of its cash collateral to fund Monroe’s operations while in bankruptcy.

Interest on the DIP financing will be 12%, subject to increase beginning on Jan. 1, 2015.

The DIP loan maturity date is Dec. 1, 2014.

The financing agreement requires the company to obtain court approval of the sale procedures by Sept. 3, conduct an auction by Oct. 8, request court approval of the sale by Oct. 17 and close the sale by Nov. 7.

The bid procedures and sale terms had not yet been filed as of Tuesday.

According to court documents, Monroe has $10 million to $50 million in assets and $100 million to $500 million in debt.

The company’s largest unsecured creditors are Vibra Acute Care LLC of Mechanicsburg, Pa., with a $3.41 million accounts payable claim; Premier Healthcare, LLC of Bloomington, Ind., with a $3.11 million accounts payable claim; and Universal Financial Svcs. LP of St. Charles, Ill., with a $1.45 million accounts payable claim.

Vibra Acute Care owns 28% of Monroe’s equity interests, Marisha, LLC owns 19%, and Daniel Biehl owns 8%.

The company is represented by Bingham Greenebaum Doll LLP.

Monroe is a Bloomington, Ind.-based hospital operator. Its Chapter 11 case number is 14-07417.

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