Steward Health Care System LLC filed for bankruptcy on Monday as it is finalizing a rescue loan with landlord Medical Properties Trust Inc. The Massachusetts-based firm sought Chapter 11 protection in the Southern District Court of Texas and listed assets and liabilities of $1 billion to $10 billion. As part of the restructuring deal, Medical Properties is set to provide initial debtor-in-possession funding of $75 million debt and an additional loan of up to $225 million if certain conditions are met.
In January, Medical Properties provided Steward Health with a $60 million bridge loan and deferred some of its rent arrears. However, despite these efforts, Steward Health has been struggling with its liquidity in recent months. The company, which operates 33 community hospitals in nine US states with more than 30,000 employees, had been forced to look for alternative sources of funding due to the delay in the sale of its physician business unit.
Medical Properties fell 18% in premarket trading to $4 as of 6:30 a.m. New York time after the news broke about Steward Health’s bankruptcy filing. Steward Health’s Chief Executive Officer cited higher costs and “insufficient reimbursement by government payors” among the factors leading to the Chapter 11 filing.
The bankruptcy process will allow Steward Health to responsibly transition ownership of its Massachusetts-based hospitals while keeping all of its hospitals open to treat patients and ensuring the continued care and service of their communities. This case is being heard as Steward Health Care Holdings LLC, 24-90212, US Bankruptcy Court for the Southern District Court of Texas.
