Jackson Hospital deal reached

Attorneys reached agreement on basic terms of restructuring in the Jackson Hospital, Alabama, Chapter 11 bankruptcy, allowing the hospital to avoid the threatened closure.

Attorneys for creditors and the hospital told U.S. Bankruptcy Judge Christopher Hawkins they agreed on the basic terms to restructure the hospital's $61 million in municipal bond debt.

Derek Meek, attorney for the hospital, told Hawkins Thursday attorneys agreed on a term sheet earlier that afternoon.

Hawkins, who suggested he would close the hospital and liquidate its assets if a deal wasn't struck by yearend, called the news a "very pleasant surprise."

Meek asked the judge to set a deadline 30 days forward to create a plan of adjustment and disclosure statement and 60 days forward to solicit creditor votes.

Doug Buckley, the attorney representing bond-trustee UMB Bank, said the majority of creditors support the term sheet.

Also at Thursday's hearing in the U.S. Bankruptcy Court for the Middle District of Alabama, Hawkins agreed to requests from lawyers for Jackson Hospital and Blue Cross and Blue Shield of Alabama to put on hold an adversary proceeding filed by the hospital against BCBSA earlier this month.

The parties are seeking a ruling from R. David Proctor, chief judge of the U.S. District Court for the Northern District of Alabama, to determine whether a class action settlement he presided over that was completed last summer precludes some of or all of Jackson Hospital's actions against BCBSA.

Chase Potter, an attorney representing the hospital, said he expects Proctor will rule by February.

The hospital claims BCBSA has engaged in anti-competitive practices to undercompensate it for services and wants Hawkins to order the insurer to immediately increase its compensation rates. In its adversary proceeding filing it said it would likely seek $250 million or more from BCBSA.

Attorneys in the bankruptcy declined to release the terms of the proposed restructuring.

In a statement to The Bond Buyer, BCBSA said, in part, "Blue Cross has negotiated with Jackson Hospital in good faith and has repeatedly increased Jackson Hospital's reimbursement rates in recognition of its financial difficulties. Jackson Hospital is more than fairly compensated by Blue Cross for the services it offers."