SYRACUSE - It took a final three-hour hearing with more than 15 lawyers in the room, but Auburn Memorial Hospital has secured confirmation of its bankruptcy reorganization plan.

U.S. Bankruptcy Court Judge Margaret Cangilos-Ruiz gave her blessing to the plan Thursday, the final major step in a process that started in April 2007 when the hospital filed for Chapter 11 protection amid mounting debts brought on by years of financial losses.

“I certainly wish the hospital the best,” the judge said from a federal courtroom bench in Syracuse. “It is an important part of the community and I'm happy you've arrived at this point.”

The confirmation must next be put into a formal written order, which will clear the way for payments on debts the hospital incurred prior to the bankruptcy filing.

The effective date of the plan will likely fall within 30 to 45 days.

Both AMH Chief Executive Officer Scott Berlucchi and Chief Financial Officer John Baran testified Thursday that they have full confidence in the hospital's ability to execute the plan.

“We're not only going to survive ... we're going to thrive,” Berlucchi said.

The judge's blessing came after some last-minute negotiations to clear up some concerns raised by the U.S. Trustee's office and some creditors.

The U.S. Trustee's office had objected to the reorganization plan's language in terms of granting a level of immunity to certain parties in the case against future lawsuits challenging their work in the case.

The parties agreed to revise language to limit the legal releases to matters specifically related to the reorganization plan itself, and not the overall case.

The agreement on that issue came together as attorneys were talking around a courtroom table just before the hearing and during a short recess.

The other major obstacle had been an objection raised by Radian Asset Assurance, a firm that insures the largest secured claim in the AMH case. Radian raised concerns of AMH's proposed use of $4.3 million from an escrow operating fund to pay back some unsecured debt and to invest in information technology upgrades.

Around-the-clock negotiations on the matter, however, led to Radian withdrawing its objection roughly an hour prior to the hearing.

Baran testified in detail about terms in the reorganization plan.

He explained that AMH would be able to pay off both the hospital's mortgage and a line of credit in full under the terms of the agreements reached.

Regarding unsecured debt, trade creditors would receive an average of 20 cents on the dollar of pre-petition debt.

The hospital also has an unsecured debt with the federal Pension Benefit Guaranty Corp. for missed payments to four employee retirement plans. In total, AMH has agreed to pay $12 million on that debt over 20 years, or $6 million if it can make the payment within three years, which Baran expects to do.

The PBGC will take over the retirement plans and make payments to the roughly 1,500 people covered by them. All but four of the covered employees will receive retirement payments in full.

Baran emphasized that the hospital has improved financial performance significantly with strong revenue growth and cost controls. The facility is also making major infrastructure improvements, a key to continued success, he said.

Berlucchi said the hospital is excited to put the bankruptcy case in the past and focus on the improvements that are being made, both in terms of financial performance and patient services.

“There's just a buzz in the community about the turnaround at the hospital,” Berlucchi said.