El Paso Children’s Hospital says UMC backtracked from proposal to pay 100% of Children’s debt
El Paso Children’s Hospital is expected on Tuesday to oppose University Medical Center’s request to terminate exclusivity, based on court documents filed.
The two hospitals will meet in a federal bankruptcy court in Austin on Tuesday.
It will be the second time UMC tries to introduce its plan to reorganize Children’s.
Judge H. Christopher Mott denied their request the first time and allowed Children’s to present its plan.
In its first request, UMC offered to pay 100 percent of the creditors’ claims against Children’s. UMC is not offering to do that this time.
Children’s thinks UMC should be, as they were going to take them up on it and add “common-sense revisions” to the UMC plan.
Children’s and UMC have gotten close to a deal before, even approved by UMC board, only to have Commissioners Court reject it.
Children’s says there is no urgency for UMC to submit it plan as UMC claims because Children’s is paying its bills and has outperformed its cash forecast.
Children’s has been talking to a possible strategic partner, even about moving to a different location in El Paso.
“UMC makes a far less compelling case for termination of exclusivity now than in its First Termination Motion, because it has withdrawn its representation that it will file a plan to pay 100% of allowed creditor claims,” Children’s argues in court documents.
UMC attempts to justify this change by asserting that a Texas Health and Human Services Commission cost report issue arose recently and is a “game-changer” for UMC.
Children’s says the cost report issue cannot be a “game-changer” if UMC knew about the potential cost report issue before the petition date.
Children’s says in documents that the evidence will show that counsel for Children’s and counsel for UMC had discussed the issue before.
Children’s claims the two hospitals discussed the issue months before UMC’s filing of the first UMC proposal hours in advance of the first exclusivity ruling.
“Because the potential cost report issue was known to both the Debtor and UMC prior to the Petition Date during confidential due diligence,in the beginning of this case, the Debtor reached out to counsel for HHSC to determine if an issue actually existed. Counsel for HHSC unequivocally stated that the Debtor was ‘not on [HHSC’s] radar.’ Moreover, after UMC identified the potential cost report issue as a reason for its desire to change its mind on the First UMC Proposal, counsel for the Debtor conferred again with counsel for HHSC. Counsel for HHSC reported that ‘there are routine audits going on per normal course of business, and HHSC is obviously monitoring the case, but there is nothing out of the ordinary of which anyone at HHSC is aware,'” according to Children’s court documents.
