Will staff at Good Sam hospital get paid? Here's what happened in bankruptcy court

BROCKTON — Lawyers for the company that operates Good Samaritan Medical Center convinced a bankruptcy judge to allow it to meet payroll for its more than 30,000 workers nationwide.

The Tuesday ruling by U.S. Bankruptcy Judge Christopher M. Lopez means doctors and nurses will be paid Wednesday, counsel for Steward Health Care said. It's one of the first decisions Lopez faced as he presides over Steward's bankruptcy case.

"There are patients showing up at the hospital right now," Lopez said toward the end of a three-and-a-half hour session of his South Texas district court. "I want them to be comfortable that the physician they're going to see has [no concerns other than their care]."

When a company files for bankruptcy, creditors swarm to make sure they get paid. Steward, a nationwide health care company based in Dallas, has more than 100,000 creditors. Interest in the first day of bankruptcy court was so intense that the phone and data lines to Judge Lopez' court crashed repeatedly. Officials scrambled to establish an extra line to accommodate the 500 or more remote connections to the session.

Steward owns eight hospitals in Massachusetts, including Morton in Taunton and Saint Anne's in Fall River, in addition to Good Sam in Brockton.

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Of the 31 hospitals Steward owns, eight are in Massachusetts. Ray C. Schrock, an attorney for Steward, reiterated the company's goal is to find new owners for them all.

"Our goal is that zero hospitals are closed on our watch," Schrock said.

Schrock said buyers are showing interest in the hospitals.

"There's so much value here. Billions of dollars of value," he said.

Later, another Steward attorney put the company's assets at $6 billion.

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Schrock, of the New York law firm Weil, Gotshal & Manges, defended the company and its controversial founder, Dr. Ralph de la Torre, who started the company with six troubled Massachusetts hospitals in 2010.

"He's built this company from the ground up," said Schrock. "It is an important company. It provides care for millions of people. Dr. de la Torre has taken a lot of punches in the press. You only hear half of the story."

He sought to cast Steward as a strong company with a cash problem.

"It's truly a life or death matter for us to get some relief. The company needs funding, it needs to be able to operate safely," Schrock said in his opening statements, hours before Lopez ruled the company could prioritize employee pay as it enters bankruptcy under Chapter 11 of federal law.

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Deal calls for Steward to sell Massachusetts hospitals by June 25

Schrock sketched a future in which a slimmed-down Steward remained a going concern, perhaps with a footprint centered on Florida.

"It's a new day for Steward," Schrock said. "We're going to do the right thing by everyone. We don't want to see these communities fail to be served."

To do that, he said Steward needed more time and money.

"We don't want to do a fire sale of assets. There's a lot of value here. We have to be deliberate and we have to be fast," said Schrock, noting that the bridge financing deals call for selling all its hospitals outside Florida by June 25. The deadline for their Florida facilities is July 26, a date he called much more realistic.

Financial backers jostle to get paid first

Much of the money that's keeping Steward afloat comes via Medical Trust Properties, an Alabama-based real estate trust that Steward sold its buildings to in a sell-leaseback arrangement. An attorney for MPT said that since December, the trust had shoveled $141 million to Steward, plus $161 million in deferred rent, $60 million from other properties and $75 million more made available to Steward on Tuesday.

Pushback from creditors and regulators was muted Tuesday, but there were hints at some of the clashes to come.

Boston-based Brighton Marine: Steward has been stonewalling

An attorney for Boston-based Brighton Marine , a not-for-profit that coordinates housing and health care for military veterans, said Steward has been stonewalling their organization by failing to provide financial transparency.

"Funds don't need to be routed through Steward, but they need to go to the military veterans receiving services," said David M. Hillman. "We're going to find a path to solve this without judicial intervention."

A major financial player in the complex bankruptcy is collectively known as "the ABL parties." This entity fronted money to Steward that it wants back. And it wants to be first in line when proceeds from the hospitals sales come in. "The filing is far more rocky than ABL parties had hoped," said attorney Kristopher M. Hansen.

Send your news tips to reporter Chris Helms by email at CHelms@enterprisenews.com or connect on X at @HelmsNews .

This article originally appeared on The Enterprise: Will staff at Good Sam hospital get paid? Here's what happened in bankruptcy court