By: Brian Bandell
SOUTH FLORIDA BUSINESS JOURNAL – The shuttered Miami Medical Center could head to bankruptcy auction and Nicklaus Children’s Hospital has lined up as a bidder.
Affiliates of Miami-based nonprofit Nicklaus Children’s Hospital are already the landlord, the biggest creditor, and a minority investor in the Miami Medical Center. If it’s successful in the bid, that would give it a second hospital in Miami and the challenge of reopening a facility that recently lost millions of dollars.
Miami International Medical Center LLC, which ran the now-closed Miami Medical Center at 5959 N.W. Seventh St., filed for Chapter 11 in U.S. Bankruptcy Court in Miami on March 9. It listed $31.4 million in assets versus $67.3 million in liabilities. The 67-bed hospital has been closed since October 2017.
According to the motion to approve bidding procedures filed by the debtor on April 30, Miami Medical Center’s state hospital license would expire in October if no corrective action is taken. The motion said that bidding for the license must take place soon to ensure there’s enough time for regulators to approve the new ownership before the license expires.
Attorney Peter D. Russin, who represents the debtor, couldn’t be reached for comment.
The debtor hopes to hold the auction for the assets of the Miami Medical Center within 60 days of the order being approved. A hearing on that motion was scheduled for April 12 before U.S. Bankruptcy Judge Laurel M. Isicoff.
Nicklaus Children’s Hospital submitted an offer as the “stalking horse” bidder. That means its bid sets the floor of the auction. However, the hospital didn’t offer to pay cash. Nicklaus Children’s Hospital submitted a $30 million credit bid representing forgiveness of a portion of how much Miami Medical Center owes it. Any other bidders would have to put down a $1.5 million deposit and bid at least $30.15 million.
According to the bankruptcy filings, the Miami Medical Center owes affiliates of Nicklaus Children’s Hospital $26.27 million for a mortgage it acquired from MidFirst Bank, $2.2 million for a direct loan, and at least six monthly payments of $970,000 in rent for its campus, which Nicklaus Children’s Hospital acquired for $88 million in January. It also provided a post-bankruptcy loan of up to $3.37 million to the Miami Medical Center.
Bankruptcy court documents show that the nonprofit hospital was a partial guarantor of the MidFirst Bank loan and the campus lease.
“This acquisition is an extension of a commitment to strategic business investment aimed at fostering opportunities for future growth,” Nicklaus Children’s Hospital said in a statement. “We are pursuing acquiring this valuable piece of property, located only two miles from our main campus, as it offers operational opportunities to enhance services for patients and the community we serve.”
The bankruptcy filing said Miami International Medical Center LLC was 69 percent owned by Miami Hospital Holdings, which is equally split between Nicklaus Children’s Hospital affiliate Children’s Health Ventures and NueHealth, an affiliate of Leawood, Kansas-based Nueterra Capital. The other 31 percent of the hospital was owned by 52 local physicians and medical groups.
If the assets of the Miami Medical Center are sold solely for the purpose of forgiving the debt to Nicklaus Children’s Hospital, there likely wouldn’t be many assets left to repay the other investors in the shuttered hospital. It’s not yet clear how much the other creditors of the Miami Medical Center would recover.
The committee representing the unsecured creditors of the Miami Medical Center filed a motion on April 2 with a limited objection to the bidding. The motion, authored by attorneys Robert Charbonneau, Jacqueline Calderin and Robert M. Schecter, requested more time to review the complicated case before the hearing.
“We are working collaboratively with the debtor on the production of information the committee would require to do an analysis of the proposed transaction, without waiver, of course, to the right to file a substantive objection if need be,” Calderin told the Business Journal.
Calderin said she’s working with the debtor to get more information on the bidding so she can better analyze the transaction on behalf of the creditors and she reserves the right to file a more detailed objection later, if necessary.
The hospital was founded in 1963 by Cuban exile doctors and previously known as Pan American Hospital. Miami International Medical Center acquired it in 2014 and closed it while performing $70 million in renovations aiming to transform it into a “concierge” medical center with private rooms, including a focus on maternity. The hospital operated for about 20 months under the new ownership, posting revenue of $18.7 million in 2016 and $20.2 million in 2017, but lost money.