Dec 22, 2006 By Christine Haines 3 min read

Federal bankruptcy Judge M. Bruce McCullough has continued the confirmation hearing on the liquidation plan for Brownsville General Hospital Inc. Attorney Lawrence Bolla, who represents the for-profit group that closed the hospital and declared bankruptcy, presented the plan to the court Thursday, only to have it pointed out by McCullough that the certificate of service to all interested parties regarding Thursday’s hearing was not in the case file.

Attorney John Vetica, who represents the Brownsville Property Corp. (BPC), the nonprofit owner of the hospital building and one of the major unsecured creditors in the case, said the fact that ballots were cast in the case indicates that all interested parties were served, so that alone was not enough to continue the hearing.

“The balloting was significant in this case,” Vetica said.

All of the former hospital’s priority secured creditors voted in favor of the liquidation plan which called for them to be paid 100 percent within 30 days of the plan’s confirmation. The unsecured creditors were split in their vote. Forty of the 43 unsecured creditors voted in favor of the plan, but those creditors represent only 25 percent of the total unsecured debt, which is not enough to constitute approval of the plan. The BPC claim is for $831,197 and is the bulk of the unsecured claims.

Bankruptcy law requires that the plan for funds distribution have the approval of at least one class of creditors that is impaired, or not scheduled to receive full payment.

“The Class 1 secured creditors are clearly impaired. They will never get 100 cents on the dollar,” Bolla said.

Vetica made note that the plan the creditors voted on said they would be getting 100 percent.

“We’ve got to go back to the drawing table is what this means. It’s a technical issue,” Bolla said following the hearing.

One objection to the bankruptcy plan had been filed by the Brownsville Nurses Association (BNA). Attorney David Fusco, who is representing the BNA, said the former hospital is addressing those objections.

“We are hoping that our priority claims will be paid in full. They promised to file the motion seeking approval of the settlement Dec. 28,” Fusco said.

Many of the former hospital employees are owed money from their last week of work, as well as for accrued paid time off and also other compensation.

Attorney Kirk Burkley, who represents the unsecured creditors in the case, and whose firm also is serving as the plan administrator, said his firm has investigated the assets of the estate.

“We have secured a settlement offer that would almost double the assets in this case,” Burkley said.

Burkley said the parties in the settlement have not yet ratified the agreement and must remain confidential for the time being.

Meanwhile, the hearing will continue on Jan. 11 in Pittsburgh.