Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
New York Health Company Filed for Bankruptcy
Author: Joel R. Glucksman
Date: June 6, 2013
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New York-based Sound Shore Health System has filed for bankruptcy law protection under Chapter 11 of the Bankruptcy Code and announced its plans to sell its assets to Montefiore Medical Center.
The company, which provides health care services to its medical center in Westchester as well as a hospital and nursing home facility, cited cuts in government spending as the cause of its financial troubles. Sound Shore listed assets of $159.6 million at the end of 2012 and liabilities of approximately $200 million, according to Reuters.
“As is true with many community hospitals serving a working-class constituency, the Medical Centers have been beset by the financial pressures caused by cuts in Medicare and Medicaid funding,” the company said when it filed documents in the U.S. Bankruptcy Court for the Southern District of New York.
In the wake of its bankruptcy filing, Sound Shore entered into an asset purchase agreement with Montefiore Health System, which will acquire its assets and assume most of its liabilities. The company said it will continue to provide uninterrupted healthcare throughout the sale period and patient treatment and care will not be impacted.
Sound Shore also noted that it has secured commitments for debtor-in-possession financing that provide it with working capital and allow it to continue operations through the bankruptcy process. While the exact terms of the deal were not disclosed, Montefiore is expected to pay roughly $54 million for Sound Shore’s assets. However, the sale remains subject to bankruptcy court approval. Both parties have said they expect the bankruptcy deal to close by the end of 2013, Becker’s Hospital Review reports.
Reuters reports that Sound Shore is not the only health services provider that has buckled under the weight of budgetary shortfalls. Recently, KidsPeace Corp of Pennsylvania, was also forced to seek bankruptcy protection as a result of spending cuts.
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