A plan proposed by the unsecured creditors of the bankrupt Johnson Memorial Hospital would amount to a “hostile takeover” of the Stafford institution by the corporation that owns Manchester Memorial Hospital and Rockville General Hospital in Vernon, a top hospital official charged on Wednesday.
Peter J. Betts, the interim president and chief operating officer at Johnson Memorial, said the committee representing the hospital’s largest group of creditors, which he estimated hold about $40 million in unsecured debt, last week asked a federal bankruptcy judge in Hartford to essentially permit the sale of Johnson Memorial to Eastern Connecticut Health Network.
Under that plan, Betts said, ECHN would act as a initial bidder prior to an auction of Johnson Memorial’s assets at which the regional health corporation is expected to be the lone bidder.
“There is, to the best of my knowledge, no other prospective buyer out there,” he added. “The committee has allied itself with ECHN.”
An EHCN spokesman said today that it had been approached by the committee, and is working for the community’s best interest.
ECHN in 2008 proposed to buy Johnson Memorial Corp.’s 92-bed hospital and 150-bed nursing facility for long-term and sub-acute care in Stafford, as well as its surgery center in Enfield.
But that deal abruptly collapsed last March after ECHN President and Chief Executive Officer Peter Karl said he had learned the creditors’ committee had selected a bid from another party.
Karl apparently was referring to an offer by a Fairfield-based consulting company, Paradigm Physician Partners LLC, which was making a second bid for the near-century-old Stafford institution.
The hospital’s board of directors had rejected Paradigm’s initial offer.
A Johnson Memorial spokeswoman, Amy Krysiewski, said Wednesday that Paradigm was now “not in the picture.”
Meanwhile, Betts, a corporate turnaround specialist, appeared especially galled by what he described as the new alliance between ECHN and Johnson Memorial’s unsecured creditors. He said the corporation had “walked away” from negotiations with the hospital.
“They told me that they projected that Johnson would lose $12 million by May of 2009 and then be closed,” he said. “Apparently they miscalculated by a wide margin, as I told them they did at the time. Now we are doing well, and all of a sudden they’re interested. Our board chairman said that we’re a victim of our own success.”
