Financially ailing Saint Michael's Medical Center of Newark, N.J., and Orange, N.J.-based Barnabas Health reached a truce by the end of the former's bankruptcy hearing Aug. 24, according an NJ.com report.
At the close of Saint Michael's opening bankruptcy hearing, Barnabas Health conceded on some of its objections to the former's requests for payments to be made to its chosen suitor, Ontario, Calif.-based Prime Healthcare Services, if another bidder wins the deal.
Barnabas Health, New Jersey's largest hospital chain, recently declared itself a bidder on Saint Michael's. Previously, the health system expressed an interest in buying Saint Michael's to close it.
Saint Michael's, which is on track to post a $24 million operating loss this year, has been awaiting the state's approval for its proposed acquisition by Ontario, Calif.-based Prime Healthcare Services since 2012. The hospital has cited the state's extended consideration of the transaction as one of the main reasons it is filing for bankruptcy.
Before the hearing Monday, Barnabas' attorney objected to terms of a deal that favored Prime as a bidder and put others at a disadvantage, including a starting bidding price of $49.1 million, Prime's purchasing price, and a required $1.2 million break-up fee paid to Prime if another bidder wins the sale.
As a result, Saint Michael's bankruptcy attorney subpoenaed Barnabas Health CEO Barry Ostrowsky to testify at the hearing and explain his objections to the deal, but withdrew the subpoena once Barnabas agreed to withdraw some of its objections to the bidding process.
U.S. Bankruptcy Judge Vincent F. Papalia upheld Saint Michael's inclusion of the $1.2 million break-up fee in the terms, plus an additional $200,000 of expense reimbursement to be paid to Prime Healthcare Services if another bidder wins.