Greater Southeast Community Hospital's creditors agreed yesterday to give hospital officials another two weeks to continue their search for an investor to save the facility from liquidation.
The hunt by investment bankers and consultants already has produced "at least one" new proposal in addition to an Arizona company's $24 million offer to buy Greater Southeast, hospital officials said. They declined to disclose details of any new bids.
Bankruptcy Judge S. Martin Teel Jr. set Oct. 27 as the deadline for a deal, and skeptical creditors, who are owed about $70 million, said yesterday's extension is likely to be the last they will agree to.
Hospital attorney David E. Rice and other officials said the interest from private investors indicates that Greater Southeast can survive.
"It was a good day," said hospital President George E. Gilbert. "I'm optimistic that with all the effort being put into this to keep the hospital open, that at the end of the day it will happen."
But Peter D. Isakoff, who represents a subsidiary of Daiwa Bank that claims Greater Southeast owes it $12 million, told Teel that Gilbert's views aren't shared by all the creditors--who could lose a total of about $300,000 for each day Greater Southeast continues to operate if the facility is eventually liquidated.
"I don't know that we share Mr. Rice's optimism of being first and goal at the 2-yard line," he said.
Teel's reprieve yesterday came a week after D.C. Mayor Anthony A. Williams (D) announced that the city would not contribute any more money to keep the hospital in business, or pay for a turnaround plan proposed by a consultant that would cost an estimated $8 million to $10 million. Since May, the city has directed $8.5 million to Greater Southeast, including a $3.1 million loan that the privately run hospital must repay.
Williams pulled the plug on any plans for a city bailout of the hospital after hearing that Doctors Community Healthcare Corp., a Scottsdale, Ariz., firm that owns tiny Hadley Memorial Hospital in Southwest Washington, had offered $24 million for Greater Southeast.
Hospital officials have been cool to the Doctors Community proposal, saying the firm has not demonstrated the financial capacity to carry it off.
In a preview of the morass of litigation that could emerge soon, the federal office that oversees the conduct of bankruptcy cases asked Teel to order Greater Southeast to retain separate attorneys for each of its four subsidiaries and corporate entities, instead of relying only on Rice to speak for them all. The subsidiaries include a hospital and a nursing home in Prince George's County.
B. Amon James, of the U.S. Trustee's office, said Rice should not be allowed to represent all of them because the facilities have borrowed, lent or transferred money to one another and each would have to protect its conflicting interests in the course of a sale, liquidation or litigation.
Teel overruled James's objection but said he will appoint a special counsel later if the conflicts become more sharply defined.