Auburn Memorial Hospital petitioned for Chapter 11 bankruptcy Tuesday to reduce and restructure $20 million in debts with the goal of freeing up its cash flow for capital investment.
Hospital officials said Tuesday that that the petition to restructure its debts was the last step necessary to complete a turnaround process begun after the hospital lost over $8 million in 2004 and 2005. Officials also said the bankruptcy filing will not mean closure of the hospital, employee layoffs or employees not being paid their regular paychecks.
"This was a difficult decision for us," Robert Bergan, president of AMH's board of trustees, said Tuesday. "It was the correct decision and this is the way the hospital is going to complete the last component of our turnaround."
The hospital has a deficit of $53 million and $40 million in total assets. The hospital has and will continue to pay the mortgages it owes on the main hospital campus and its other sites, officials said. But the hospital is petitioning in United States Bankruptcy Court for the Northern District of New York to have the $13.5 million it owes in missed obligations for four employee pensions plans and an estimated $7 million owed to various vendors restructured to a more manageable level.
What the hospital will ultimately pay to its creditors will take several months to negotiate. Hospital officials expect the bankruptcy will be finalized by the end of the year.
All but five hospital retirees will have their pensions guaranteed by the Pension Benefit Guaranty Corporation. The corporation guarantees pensions up to $49,500, a spokesman said.
County officials expressed support for AMH's goal of financial restructuring.
"The Cayuga County Legislature is confident in the ability of the hospital's trustees, management, medical, administrative and support staff to complete this financial restructuring in an expeditious manner and fully supports this effort," said David Pappert, the Cayuga County legislator point person on issues related to the hospital, in a statement.
For more on this story, pick up Wednesday's edition of The Citizen.
"This was a difficult decision for us," Robert Bergan, president of AMH's board of trustees, said Tuesday. "It was the correct decision and this is the way the hospital is going to complete the last component of our turnaround."
The hospital has a deficit of $53 million and $40 million in total assets. The hospital has and will continue to pay the mortgages it owes on the main hospital campus and its other sites, officials said. But the hospital is petitioning in United States Bankruptcy Court for the Northern District of New York to have the $13.5 million it owes in missed obligations for four employee pensions plans and an estimated $7 million owed to various vendors restructured to a more manageable level.
What the hospital will ultimately pay to its creditors will take several months to negotiate. Hospital officials expect the bankruptcy will be finalized by the end of the year.
All but five hospital retirees will have their pensions guaranteed by the Pension Benefit Guaranty Corporation. The corporation guarantees pensions up to $49,500, a spokesman said.
County officials expressed support for AMH's goal of financial restructuring.
"The Cayuga County Legislature is confident in the ability of the hospital's trustees, management, medical, administrative and support staff to complete this financial restructuring in an expeditious manner and fully supports this effort," said David Pappert, the Cayuga County legislator point person on issues related to the hospital, in a statement.
For more on this story, pick up Wednesday's edition of The Citizen.
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