Chaos Hits CharterCare Sale, Petition Filed to Close Roger Williams and Fatima
GoLocalProv News Team
Chaos Hits CharterCare Sale, Petition Filed to Close Roger Williams and Fatima
The motion, if granted by Chief Judge Stacey Jernigan of the U.S. Bankruptcy Court for the Northern District of Texas, would be to close Roger Williams and Fatima Hospitals or to transfer them to the State of Rhode Island.
According to the court documents, “The Debtors do not seek the relief set forth in this Motion lightly. When the Court approved the sale of the Debtors’ Rhode Island hospitals (including the Roger Williams Medical Center and Our Lady of Fatima Hospital) and related operations (the “RI Hospitals”) to The Centurion Foundation, Inc., CharterCARE Health of Rhode Island, Inc., and each of their successors and assigns (collectively, “Centurion”) on February 12, 2025 (the “Centurion Sale”), the Debtors were assured that closing would occur “30 to 60 days after entry of the sale order.””
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTFurther, “Now, more than eight months after approval of the Centurion Sale, and six months after that promised closing date, the Debtors can no longer afford to fund the RI Hospitals on the hope that Centurion may finally obtain adequate financing to close the Centurion Sale.”
Rhode Island Attorney General Peter Neronha said in a text to GoLocal, "It’s not surprising as Centurion has not yet been able to close their deal, but Rhode Islanders at this point should not conclude that there is no future for these hospitals. We will be in court in Dallas when this motion is considered, and I believe we can chart a path forward that will keep these hospitals open and operating."
The financing deal has been in chaos for months. Bonds to finance the deal were never sold, and even after restructuring the deal, the bonds failed to sell.
The first bond package was rated BB- with a negative outlook by S&P, one of the leading bond rating agencies.
But since that rating, S&P has raised more concerns as the so-called Big Beautiful Budget bill is expected to have an adverse effect on the hospitals due to expected Medicaid cuts.
And according to the court filings, debt has continued to mount.
“The RI Hospitals operate at a significant loss. On the first day of the hearing in these Chapter 11 cases, the Debtors stated that they would transfer the RI Hospitals to Centurion, a buyer that had the support of the Rhode Island Attorney General and the Rhode Island Department of Health (“RIDOH”). Although the Debtors would receive little direct consideration under the Centurion Sale, in addition to allowing for continuity of care and jobs for the Rhode Island community, the contemplated benefit to the Debtors’ estates was the ability to shed the continuing losses being incurred by the Debtors,” according to Prospect’s filing.
“However, this benefit proved illusory, as the closing of the Centurion Sale has been repeatedly delayed due to Centurion’s inability to obtain the financing necessary to meet the conditions imposed on the sale by the Rhode Island regulators. This six-month delay in closing has required the Debtors to incur significant, unanticipated additional losses of approximately $18.7 million, with an additional $6 million in losses expected by the end of November,” stated the filing.
Close or Transfer
The petition seeks to "(a) authorize the transfer of the RI Hospitals to the State of Rhode Island or its designee, subject to the assumption of the post-petition operating liabilities of the RI Hospitals and the agreement of the State of Rhode Island, or, in the alternative, (b) approve the safe and orderly closure of the RI Hospitals on an expedited basis and authorize the liquidation of their assets; and (ii) granting related relief."
Neronha added, "Also, the fact that we have $50 million in our escrow account for the benefit of these hospitals, irrespective of who owns them brightens what could be viewed as a very dark outlook."
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