As Grupo HIMA pushes sale of properties, court raises concerns about a ‘sub rosa’ ploy
By The Star Staff
Bankrupt Grupo HIMA hospital system has received at least three letters of intent to purchase facilities and has asked the court to let it hire Illinois-based Hilco Real Estate to sell some 78 offices and facilities in Bayamón, Caguas, Humacao and Fajardo.
The court, however, recently raised concerns that the proposed sale may be a “sub rosa plan,” a transaction entered outside of a bankruptcy case that acts as a de facto Chapter 11 plan of reorganization and evades requirements of the Bankruptcy Code.
Grupo HIMA, one of the largest hospital systems in Puerto Rico, filed for bankruptcy in August to restructure some $400 million in debt.
After initially saying it planned to sell a Fajardo facility, Grupo HIMA said in a motion Tuesday that it has contemplated the sale of all its properties and sought to employ Hilco Real Estate LLC as the estates’ real estate broker to provide such consultation and procure the sale of their properties, which may include their chattel property and going concern.
Within the services to be provided, Hilco would assist in identifying potential buyers for the properties. Grupo HIMA said it has retained Hilco based on a $50,000.00 retainer, according to the Sept. 5 motion. As set forth in the agreement, in the event a property is sold, Hilco will earn a fee equal to 5% of the gross sale proceeds. In the event two or more properties are sold as “going concern sales” or are otherwise sold outside of the agreement, the routine fee applicable to the sale of the remaining properties sold by Hilco will increase 1%, for a total fee of 6% of gross sale proceeds.
At a hearing on Aug. 23, HIMA’s lawyer, Alexis Betancourt, said the key effort of Grupo HIMA was to sell the hospitals while they were still operating. He said they have received three letters of intent and non-disclosure agreements and requests for information for four of the hospitals.
Thus, potential sales are a real prospect, he said. Nonetheless, potential sales of the hospitals would not be available if the hospitals were to close, he said. The hospitals need to be transferred while operating and while licenses are in place.
The court interjected to clarify as to the intent of the debtors to sell the hospitals as a going concern. The judge said a prior motion for a sales order refers to the Fajardo stalking horse agreement, giving the impression that the property to be sold was the Fajardo property.
However, the judge said that upon careful reading of the specific content and the bidding procedures, the motion includes the sale of all the debtors’ properties in an expedited request, which may give the impression that it is a sub rosa plan, an argument also raised by the Fiscal Agency and Financial Advisory Authority at a prior hearing.
A sub rosa plan could seriously impact the bankruptcy process.
The court stated that if the motion on an expedited basis is for the sale of all the assets, when the debtors have not filed schedules, disclosure statements, plan and a creditors’ committee has not been appointed, such a scenario raises a concern with respect to the expedited sale of all properties.
Betancourt replied that the motion that had been filed contains bidding procedures for all properties. It includes a purchase agreement that has a stalking horse for the Fajardo property. However, the debtors were pursuing the sale of all the properties of the debtors. The court stated that disclosure of facts and due notice were critical, and inquired as to how parties in interest will be placed in a position to express an opinion as to what is going to happen if the supporting data is not before the court and due notice to all parties in interest may not have been given.