In this article, Adam Stein-Sapir of Pioneer Funding Group provides insight into the bankruptcy auction process.
Article Link: https://www.bizjournals.com/southflorida/news/2015/04/17/hollywood-hospital-with-jailed-ceo-seeks.html?page=all
Summary
The Hollywood Pavilion hospital, along with related entities, filed for Chapter 11 bankruptcy to halt a foreclosure lawsuit, with its former CEO incarcerated for Medicare fraud. An affiliate of Larkin Community Hospital, which operates the hospital and nursing home under receivership, claims a $14 million debt and has initiated a bankruptcy auction. A stalking horse bid of $17 million has been set by 1200 North 35th Avenue LLC and Hollywood Hills Operator. The auction aims to repay all debts, but the outcome may be complicated by the former CEO’s legal situation and ongoing appeal.
- The Hollywood Pavilion hospital is facing a bankruptcy auction with a $17 million stalking horse bid.
- The former CEO, Karen Kallen-Zury, is serving a prison sentence for Medicare fraud and is unlikely to profit from the sale.
- Adam Stein-Sapir commented on the potential for Larkin Community Hospital to employ a “loan to own” strategy if the sale price were lower.
Q&A
What is a stalking horse bid in a bankruptcy auction?
A stalking horse bid is an initial bid on the assets of a bankrupt company, set by an interested buyer chosen by the bankrupt company. This bid sets the minimum price for other bidders and can help prevent low-ball offers.
How does a “loan to own” strategy work in bankruptcy?
A “loan to own” strategy involves a creditor bidding on the assets of a bankrupt debtor using their debt claim as currency. If the creditor’s bid is successful, they can convert their debt into ownership of the assets. For more information on bankruptcy proceedings, visit Pioneer Funding LLC.
What happens to the profits from a bankruptcy sale if the former owner is in legal trouble?
Profits from a bankruptcy sale would typically be used to repay creditors. However, if the former owner is in legal trouble, such as being convicted of fraud, the government may intervene to ensure that the individual does not profit from the sale, potentially redirecting funds to pay fines or restitution.
