Florida Hospital Looking for Buyer While CEO in Jail
Officials at Hollywood Pavilion Hospital and the Hollywood Hills Rehabilitation Center, of Hollywood, Florida, have decided that the best move forward for their financially struggling hospital and nursing care facility, is to seek being sold at a bankruptcy auction.
The move took place while the hospital’s former CEO, Karen Kallen-Zury, is in the middle of serving a 25 year prison term for being found guilty in 2013 on claims of millions of dollars in Medicare fraud at the hospital.
Auction is the Best Path Following Bankruptcy Filing
The decision for the hospital and rehab center to seek a bankruptcy auction was reached on April 13, 2015, when an affiliate of HHRC, High Ridge Management Corporation, filed a motion to have the hospital be put on the selling block.
Included in the motion for bankruptcy auction was a proposal for the auction to be held at the law offices of Markowitz, Ringel Trusty & Hartog in Fort Lauderdale, Florida on May 26, 2015 at 10 a.m.
This came only five days after High Ridge and HHRC, together with related company Hollywood Pavillion LLC, filed for Chapter 11 reorganization. Company officials deemed it necessary to file for bankruptcy in light of a large foreclosure lawsuit.
Hospital Operator is its Primary Creditor
HHRC is managed by Larkin Community Hospital, which is also located in South Florida. Larkin had previously bought the mortgage on the hospital’s property, and they claim that they’re owed $14 million by HHRC and its affiliates.
Before Larkin took over the operations for the rehabilitation center, annual losses were reported at over $2 million, according to the Florida Agency Health Care Administration.
The large, nearly 60,000 square foot facility is comprised of a 50 bed hospital along with a 152 bed nursing and rehabilitation center.
Potential Bid Would Erase Hospital’s Debt
High Ridge Management announced that it had already received an initial bid of $17 million. The bid was offered by Jonathan Bleier and Jacob Sod who own Highfield Gardens Care Center in Great Neck, New York.
If the judge presiding over the case decides to approve of the auction, a bid of $17.7 million would be needed to overcome the $17 million stalking horse bid.
HHRC’s attorney, Grace E. Robson, said that the bid would allow the hospital to repay all of its debt.
Kallen-Zury, who is currently appealing her conviction, is the owner of 99% of the hospital through a trust. This may allow her to see profit from a potential sale at the auction block.