Deal Could Rescue Interfaith Hospital From Bankruptcy by Mid-May
BEDFORD-STUYVESANT — After more than a year in bankruptcy and frequent closure scares, Interfaith Medical Center has reached a deal with the state that could take the hospital out of Chapter 11 as soon as May 14, hospital officials announced on Wednesday.
The deal, which includes a new state-mandated management team that will take over the hospital "effective immediately," is part of a reorganization plan that would provide Interfaith with additional funds to stay open while also replacing senior management, the hospital's board of directors said.
“With the support of our employees, our patients, our community and our elected representatives, we are very gratified that we have been able to demonstrate to the State the importance of IMC," read a statement from Board Chairman Albert C. Wiltshire.
"[W]e are hopeful IMC’s new senior management team will equally recognize the necessity of IMC’s services to the people in our well-defined and well-known catchment area and succeed in assuring the continuation of their health care, and in keeping IMC alive.”
As part of the shakeup, the hospital named former bankruptcy judge Melanie Cyganowski as chief restructuring officer and former Brookdale and Long Island College hospitals executive Steven Korf as chief executive officer, replacing interim CEO Pradeep Chandra.
The deal was first reported by City & State on Tuesday.
The news marks a significant turning point for the troubled hospital, which began to see problems in 2010 when the state cut Medicaid reimbursements. In December 2012, the hospital officially declared bankruptcy.
Closure proceedings were set to begin last August, but the shutdown has repeatedly been pushed back thanks to short-term state funding intended to give attorneys time to agree on a deal.
It is not yet clear whether a restructuring plan would include a full-service hospital, or whether some services would have to be cut.
But the deal would go a long way toward helping a medically underserved community, Wiltshire said.
“Interfaith Medical Center is the ultimate safety net hospital," Wiltshire said. "This, along with preserving health care jobs in IMC’s community and maximizing creditor recoveries, is what we having been fighting for all this time.”