In March, AHF made an $85M all-cash offer for the hospital for use as a COVID-19 care facility, but later declined the opportunity to increase its bid; a hearing is set for tomorrow, Friday, April 10th at 10:00 am PT in U.S. Bankruptcy Court, Central District of California before Judge Ernest Robles
With an offer of $135M, a foundation led by Los Angeles Times’ owner Dr. Patrick Soon-Shiong appeared to be the leading or ‘stalking horse’ bidder for the shuttered 381-bed hospital, which he intends to lease to the state and also repurpose as a treatment center for COVID-19 patients
However, California A.G. Xavier Becerra challenged elements of the bid over concerns about the possibility of self-dealing: Verity Health System, a separate Soon-Shiong controlled company is one of the secured creditors in the bankruptcy and could get up to $66M from the court proceedings
LOS ANGELES (April 9, 2020) As the reach of the COVID-19 pandemic continues to grow daily here in California and ahead of a U.S. Bankruptcy Court hearing in Los Angeles tomorrow (Friday) at 10:00 am PT, AIDS Healthcare Foundation (AHF) today is questioning problematic elements of a high profile bankruptcy court bid to purchase L.A.’s shuttered 381-bed St. Vincent Medical Center to repurpose as a treatment center for COVID-19 patients. AHF is urging the court to reconsider the leading bid and also consider alternative nonprofit proposals and offers that do not involve the same problems and conflicts associated with the lead bidder.
The state intends to lease the hospital, which dates back to 1856 and permanently shut down operations on January 24th due to the bankruptcy of Verity Health System. It intends to use the facility for treatment and care of coronavirus patients.
In March, AHF made an initial $85 million all-cash offer for the hospital to the bankruptcy court for similar use as a COVID-19 care facility. It later partnered with New Commune LLC and upped its offer to submit a formal bid for consideration to $120 million. However, with an offer of $135 million, a foundation led by Los Angeles Times’ owner Dr. Patrick Soon-Shiong and his wife, Michele B. Chan, appears to be the leading or ‘stalking horse’ bidder for the hospital. AHF declined opportunities from the court to further increase its offers to bid.
But in a twist that muddies the actual dollar value of the Soon-Shiong/Chan foundation’s bid, California Attorney General Xavier Becerra yesterday challenged elements of the bid over concerns about the possibility of self-dealing: Verity Health System, a separate Soon-Shiong controlled company, is one of the secured creditors in the bankruptcy and could get up to $66 million from the court in the proceedings., according to the Los Angeles Times.
“First are foremost and in the middle of this expanding pandemic, we want St Vincent Hospital repurposed as a care facility for COVID-19 patients,” said Michael Weinstein, President of AIDS Healthcare Foundation. “However, with the leading, albeit well-intended bidder for St Vincent also a leading creditor in the same bankruptcy proceedings, the perception—and the math—changes. A $135 million bid that may also result in $66 million award as a creditor could be viewed as adjusting the value of Soon-Shiong’s bid to $69 million—far less than the $85 million cash that AHF initially offered or the $120 million in conjunction with New Commune LLC.”
AHF is urging Judge Robles and the court to reevaluate the bid from the Soon-Shiong/Chan foundation, as well as Soon-Shiong’s subsequent offer to purchase the facility outright with his own personal funds.
“Bottom line: There are alternative nonprofit offers and proposals out there for St. Vincent’s transition to a much needed COVID-19 facility that do not involve the same problems and conflicts raised by the leading bidder. We urge Judge Robles and the court to also consider these alternatives.”