Tantalizingly close to fulfilling a longshot promise made last October when bankrupt Brotman Medical Center was wandering in the financial wilderness, CEO Stan Otake said this afternoon that Culver City’s hospital should be within view of quitting bankruptcy following a statutory hearing on Nov. 8.
“This will be the final step,” said Mr. Otake, trying to prevent himself from exulting too soon because a legal hurdle, always unpredictable, remains.
If federal bankruptcy Judge Sherry Bluebond, who knows the rival parties well by now, approves a disclosure statement and reorganization plan that Brotman officials filed with the court two weeks ago, the perspira tion on their foreheads should be allowed to safely evaporate.
Thereafter, the anticipated exit from the humbling experience of bankruptcy and the joy of enthusiastically shedding the hospital’s lender for the last six months, Prime Healthcare, Inc., of Victorville, will be in the hands of lawyers, Mr. Otake said.
He predicted Brotman will emerge out from under the dreaded blanket of bankruptcy by the end of December, “January at the latest.”
The hospital is positioned to divorce Prime after one of the briefest and rockiest marriages in Southern California, because last summer Mr. Otake led an executive team that swung a deal that once might have been unthinkable. The Jewish Home for the Aging, eager for years to create a presence on the densely Jewish Westside, acquired the western half of the hospital campus, about 2.5 acres, for a little more than $21 million. The price for shedding Prime is expected to fall into that range.
To hear some critics characterize Brotman’s history for the last quarter-century, the 84-year-old hospital was a hopelessly sinking institution to be shunned, on a one-way, irreversible voyage to the bottom of the healthcare sea.
However, when Mr. Otake was hired as the chief executive last October, hours before the fading hospital filed for Chapter 11 bankruptcy protection, he boldly predicted that Brotman would successfully emerge from bankruptcy within 12 months.
The Recovery Process
Having engineered one of the astonishing business turnarounds in the 91-year history of Culver City — halting the bleeding, then reversing the downward course, steadying a chronically jittery operation where morale often was at grass-level, and slapping a fresh paint job onto its tattered image — Mr. Otake repeatedly described the ongoing state of Brotman as “stabilized.”
In commerce, that is known as oxygen.
In making today’s announcement, the CEO said that while “the new Brotman” can best be described as “lean and mean, smaller and more efficient,” the number of persons employed by the hospital actually has swelled by about 100 within the past year.
“The papers we have presented,” Mr. Otake said, “form a summarization of what has been happening, including discussions with our creditors — people Brotman owed money to prior to the bankruptcy filing. It adds up, roughly, to $21 million. These groups and individuals are known as unsecured creditors. We have worked with the Creditors Committee to come up with a resolution for getting out of bankruptcy that will pay them off at a rate of about 35 or 40 cents on the dollar over a period of time.
Payment Plan
“There will be a structured payout,” Mr. Otake told the newspaper. “Two and a half million dollars will be paid at the time of exit,” meaning in 75 to 100 days, when Brotman gets out of bankruptcy. Within another year, another amount of $1 million we will give. Then, within a four-year time period, we will pay an additional $4 million. That will be payable, with interest, over a 48-month time period.”
What about Prime Healthcare?
“With the reorganization plan and disclosure statements filed, we have the apparatus in front of the judge for her to adjudicate the impairment fees, the junk fees, the default interest, the default penalties in the amount that totals about $10 million,” Mr. Otake said. “The judge’s preliminary ruling was to, hopefully, take that out of the identified amounts owed to our current lender, Prime Healthcare.”
(To be continued)
