WILKES-BARRE - Saint Catherine Medical Center Fountain Springs is headed to liquidation and closure, as a federal judge on Wednesday approved converting the hospital's bankruptcy petition to that status.
After a 25-minute hearing in the Max Rosenn United States Courthouse, U.S. Bankruptcy Judge John J. Thomas ordered that the case filed by the debtor, Saint Catherine Hospital of Pennsylvania LLC, be changed to Chapter 7, which allows for liquidation of a business' assets, from Chapter 11, which permits reorganization of a business.
"I'm going to waive any further notice and convert this to Chapter 7" for the good of the community, Thomas said in making his ruling from the bench. "I think it would expedite an eventual reprocessing of the assets."
Thomas' decision, in which he also directed that the hospital's top 20 creditors be notified that the case has been changed to a Chapter 7 bankruptcy, followed the recommendation of William G. Schwab, Lehighton, the bankruptcy trustee who had filed a report Monday saying he did not think the business could be reorganized, partly because it has debt of more than $5.8 million.
Liquidation, the selling of all the business' assets and distribution of them to creditors, will mean the closing of the 129-year-old hospital, although it eventually could reopen under new management.
Saint Catherine filed its bankruptcy petition April 9, asking the court to allow it to reorganize.
The state Department of Health has revoked the hospital's license and its approximately 150 employees have been left out of work.
No one opposed changing Saint Catherine's bankruptcy to liquidation, including the debtor, according to John H. Doran, Wilkes-Barre, the lawyer representing Saint Catherine Hospital of Pennsylvania.
"This company is not going to resurrect itself. We have several hundred creditors," Doran, the only lawyer physically present in the courtroom, told Thomas. "There is not a full staff at the hospital."
Participating in the hearing by telephone, S. John Price Jr., Pottsville, solicitor for the Ringtown Municipal Authority and the boroughs of Ashland and Ringtown, said his chief concern is the health of the people of the region the hospital serves.
"My concern is with the welfare of the citizens. I was born there," said Price, an Ashland native who does not object to converting the hospital's case to liquidation. "There are people who are in need of medical care."
Doran also said the area needs medical care, and he would like to find a buyer for the hospital.
"It's a very limited market," Doran said.
Schwab, who also participated in Wednesday's hearing by telephone, said he is having difficulty finding professionals for the hospital. In his report, he had written that he had contacted four regional hospital groups about buying the hospital, but none were interested.
After the hearing, Doran said he hopes the hospital can reopen but he cannot say when that might occur.
"It's a very perplexing thing," Doran said. "Delay ... can only work to our detriment."
The hospital is closed to patient care "for the foreseeable future" and if it reopens, it almost certainly will be under different management, according to Doran.
"I don't think you will see Saint Catherine running a hospital" in Pennsylvania, he said. "Hopefully, there will be someone out there."