Steward Health Care System LLC filed for bankruptcy on Monday as it finalized a rescue loan with landlord Medical Properties Trust Inc. The Massachusetts-based firm sought Chapter 11 protection in the Southern District Court of Texas, listing assets and liabilities between $1 billion and $10 billion. This filing allows Steward Health to keep operating as it pursues approval for a restructuring plan.
The company, operating 33 community hospitals in nine US states with more than 30,000 employees, has faced liquidity issues recently. As part of the restructuring agreement, Medical Properties, a US real estate trust focusing on health care facilities, is prepared to provide initial debtor-in-possession funding of $75 million in debt and an additional loan of up to $225 million if certain conditions are met. Medical Properties had previously given Steward Health a $60 million bridge loan and deferred some rent payments.
Stewart Health’s CEO Ralph de la Torre attributed the bankruptcy filing to higher costs and insufficient reimbursement from government payors. The delay in the sale of its physician business unit led to the search for alternative funding sources. De la Torre stated that through the bankruptcy process, Steward will be able to better position itself to transition ownership of its Massachusetts-based hospitals, keep all hospitals open to serve patients, and ensure continued care and service to communities. The case is filed as Steward Health Care Holdings LLC, with the number 24-90212, in the US Bankruptcy Court for the Southern District Court of Texas.
