Saint Catherine Healthcare defies trustee, seeks to sell land, building
by peter e. bortner
FOUNTAIN SPRINGS - The owner of the building that housed Saint Catherine Medical Center Fountain Springs wants to sell the property, and believes he can do so in spite of the bankruptcy of the company that operated the hospital - a view not shared by the operator's trustee.
"I am confident that we're going to sell it," Robert Lane, a member of the board of Saint Catherine Healthcare of Pennsylvania LLC, said Thursday about the 101 Broad St. property just outside Ashland. "We're trying to market the building through a professional marketing firm."
Lane said the sale is completely separate from the fate of Saint Catherine Hospital of Pennsylvania LLC, which operated the facility until filing for bankruptcy April 9, 2012.
"They're separate legal entities," with different boards of directors, Lane said.
This effort to sell the property puts Saint Catherine Healthcare on a collision course with William G. Schwab, of Lehighton, the trustee in bankruptcy for Saint Catherine Hospital, who asked U.S. Bankruptcy Judge John J. Thomas on Nov. 5 to rule that the hospital building - which occupies more than 160,000 square feet and the more than 20 acres on which it sits - belong to his entity.
"The trustee's review ... reflects that (Saint Catherine Hospital) and (Saint Catherine Healthcare) operated as a single business enterprise," Schwab's Nov. 5 complaint, on which Thomas has not yet ruled, reads in part.
Schwab could not be reached Thursday for comment on the efforts by Saint Catherine Healthcare to sell the property.
In its bankruptcy petition, Saint Catherine Hospital asked the court to allow it to reorganize. It originally filed the petition as a Chapter 11 reorganization case but Thomas on April 18 converted the case to a Chapter 7 liquidation case.
Strong interest anticipated
The state Department of Health has revoked the 107-bed hospital's license and its approximately 150 employees have been left out of work.
Founded as the State Hospital for Injured Persons of the Anthracite Coal Region at Fountain Springs by the state Legislature in 1879, the construction of the original facility began in May 1880 and was completed in 1882.
Lane said Saint Catherine Healthcare has hired Newmark Grubb Knight Frank, New York City, which he called "an experienced health care real estate firm," to market the property.
"We are excited to represent Saint Catherine Healthcare and anticipate strong interest in the property," said Todd Perman, executive managing director of the global health care group that also has offices in King of Prussia and Philadelphia.
Saint Catherine Healthcare wants to keep the property as a health care facility but not necessarily a hospital, according to Lane. The property has a number of assets that should make it marketable, Lane said.
"The property has a great location. It's a good-sized facility," he said. "There has been some strong community support. The business climate locally is a positive one."
Lane declined to say what entities have expressed interest in buying the property.
"Each party we have spoken to has signed a nondisclosure agreement," he said.
He said Saint Catherine Healthcare has not had the property appraised but might do so.
"That would help determine what a fair price would be," Lane said.
Lane is not bothered by potential opposition from Schwab.
"He is not required to give his consent" because the entities are separate, Lane said. "Mr. Schwab is arguing otherwise."
In his Nov. 5 complaint, Schwab alleged that there is no real difference between Saint Catherine Hospital and Saint Catherine Healthcare.
Both were created at the direction of Lane in connection with his purchase of the property and hospital, and there was no difference made in their operations, with a "deliberate blurring" of any corporate distinction between them, according to the complaint.