SYRACUSE - Since Auburn Memorial Hospital filed a bankruptcy petition April 24, the hospital has not seen a drop-off in the number of patients and long-term care residents or an exodus of employees, the hospital's bankruptcy attorney told a federal judge Wednesday.

AMH “continues to provide all of its services to patients and long-term care residents,” Stephen A. Donato said in United States Bankruptcy Court for the Northern District of New York. “We were concerned about a drop off of revenue. There is no sign of a drop off of revenue. ... There is no sign of a drop off in outpatients or admissions.”

The attorney also told Judge Margaret Cangilos-Ruiz that since the hospital filed its petition, AMH has stayed within its projected budget.

“People seem to understand we're at this bankruptcy court for a solution,” Donato said.

By filing a Chapter 11 bankruptcy petition, AMH must go before a bankruptcy judge to get permission for most major and minor financial decisions. AMH's bankruptcy is not expected to be finalized for several months.

The hospital will continue to pay the mortgages it owes on the main hospital campus and one other site, but it is seeking a reduction and restructuring of over $20 million in debt.

Scott Berlucchi, AMH's chief executive officer, wrote in a letter to employees this week, that AMH was in the black for the first four months of 2007.

“From an operations standpoint, I'm pleased to report that your efforts have results in business continuing as usual,” Berlucchi wrote. “In fact, our census is up, and we have just completed the first four months of the year in the black. This is the best position we have been in for years.”

First Niagara Bank extended its line of credit with AMH by $500,000, which Berlucchi wrote the hospital may not need to draw upon for two to three months.

Cangilos-Ruiz also ruled Wednesday that Auburn Memorial Hospital may retain the firm Bond, Schoeneck and King, PLLC, of Syracuse, as its bankruptcy counsel and pay the firm a $250,000 retainer.

No creditors objected to the firm's appointment, but they were given the opportunity to do so because the firm also represents Excellus BlueCross BlueShield of Central New York and First Niagara Bank, two of AMH's creditors on separate matters. The group will ultimately vote on a plan of AMH's restructuring.

A five-member Committee of Unsecured Creditors has been formed from some of AMH's biggest unsecured creditors: $15.866,500 is owed to Pension Benefit Guaranty Corporation, a government entity which protects the retirement incomes of 44 million workers; $96,365 to Medtronic Inc.; $335,595.77 owed to Mohawk Hospital Equipment, Inc; $156,716.99 to Stand Energy Corporation; and $69,814.46 to Sywest Medical Technologies Inc. The hospital owes a total of $7,811,269.80 to its unsecured creditors besides the PBGC.

One of the few contested motions Wednesday involved the establishment of monthly payment of professionals retained by the hospital during its bankruptcy, including the Bond, Schoeneck and King firm and other professional firms like accountants. Attorneys conferenced before the hearing for more than an hour to settle most of the other issues ahead of time.

Guy A. Van Baalen, the Assistant United States Trustee for the Northern District of New York, objected to the plan to have invoices issued by the professionals on a monthly basis for their services, have the the invoices filed with the court and other interested parties, and allow 15 days for the parties to review and object over the payments.

Van Baalen's concern was that the arrangement would allow the law firm and other professionals to keep on billing without a more regular check by the court; that the size of AMH's filing is not so large that it would cause the law firm and other professional firms great hardship to delay the timing of their payments; and that bankruptcy law only rarely allows a monthly payment system. The United States Trustee Program is part of the U.S. Department of Justice that oversees the administration of bankruptcy cases.

“The debtor has a tremendous amount of debt and obviously a huge PBGC claim,” Van Baalen said.

Cangilos-Ruiz said she felt the arrangement was an orderly way to manage the process, but that the hospital's operating reports, including information about the professional firms' activity, must be filed on time.

The motion calls for the professionals to be paid 80 percent of their fees, minus a 20 percent holdback, and 100 percent of expenses.

Due to another objection by Van Baalen's office, Bond, Schoeneck and King also dropped its request for its $250,000 retainer to be treated as a security, or an “evergreen account,” and to also be paid separately by AMH. Instead, the firm will draw down its fees from the $250,000 retainer.

Cangilos-Ruiz also approved motions for AMH to make refunds for overpayments made by patients and other payors; to pay employee wages and benefits; to continue to use its existing bank accounts; to pay sales and use taxes accrued before the bankruptcy petition; and to maintain trust fund accounts for patients at the Finger Lakes Center for the Living.

The judge also entered an interim order for AMH to continue its current payment arrangement to Excellus Blue Cross/Blue Shield for past-due employee health insurance premiums through June 14. AMH owes Excellus $581,603.35 for past premiums.

The hospital had $64,967,679 in gross revenues in 2005; $68,445,214 gross revenues in 2006; and $22,147,000 gross revenues so far in 2007, according to court documents.

Staff writer Amaris Elliott-Engel can be reached at 253-5311 ext. 282 or at amaris.elliot-engel@lee.net