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El Paso Children’s Hospital reacts to Bankruptcy court hearing

Today, the bankruptcy court concluded the hearing on the matters heard beginning August 31, 2015, including El Paso Children’s Hospital Motion to Extend Time to Assume or Reject Lease and UMC’s Motion to Compel Payment.

After the conclusion of the hearing, Judge Mott issued an oral ruling, and granted El Paso Children’s Hospital motion to extend time to assume or reject the leases of nonresidential real property for an additional ninety days, up through and including December 15, 2015.

The bankruptcy court denied El Paso County Hospital District D/B/A UMC of El Paso’s objection of EPCH’s motion to extend time to assume or reject the lease.

Judge Mott stated that he will endeavor to rule on UMC’s Motion to Compel Payment at the next hearing date, September 8, in El Paso, if time permits.

After the hearing, El Paso Children’s Hospital CEO Mark Herbers issued the following statement:

“We are pleased with the bankruptcy court’s ruling on the extension to assume or reject the lease. The bankruptcy court considered several factors in our ruling to extend time.  The bankruptcy court found the following factors were heavily in favor of granting EPCH an extension:

  •    Whether the rent has been paid or is being paid, because EPCH has been paying UMC substantial amounts since filing its bankruptcy case for UMC’s provision of services to EPCH.
  •    Whether the lease is a primary asset of the estate.  
  •    Whether the case is usually large or complex, because EPCH’s business is complex in that it operates a children’s hospital.
  •    Whether the debtor in possession (EPCH) has had a reasonable period of time to analyze the estate and formulate a reorganization plan.
  •    Whether the debtor in possession has had a reasonable period of time to assess the financial situation given that its disputes with unresolved.
  •    Need for time for adjudication of the lease, given that pending for adjudication by the court are the debtor’s causes of action for recharacterization and reformation of the lease.

We are optimistic and await the bankruptcy court’s ruling on UMC’s motion to compel lease payment, to which we objected.  The bankruptcy process is open, transparent, and a process that the public can trust.  

As we have stated before, EPCH maintains that the citizens of El Paso should not have to pay for the building twice. The building occupied by EPCH is fully funded by revenue bonds to provide for the pediatric population of El Paso.  The stated rent under the lease reflects the complex world of healthcare funding but was never meant to be paid if government reimbursements were not available to offset the stated rent.  The contingent nature of the rent charged is reflected in various provisions of the lease and the parties’ master agreement all as set forth in EPCH’s pleadings and in the sworn testimony of the witnesses.  Our counsel did a great job in eliciting the testimony of several witnesses on the stand and presenting evidence.

We want to thank the witnesses who testified in support of EPCH as well as our employees who have remained steadfast as we have navigated through this bankruptcy process. As it always has been, our goal is to maintain the highest level of quality care for our patients.  Once again, our thanks go out to our patients and their families for entrusting us with their healthcare.

Remaining transparent and accessible is critical to ensuring that our EPCH community is informed of processes in place and the progress being made as we move through the legal proceedings.”

Author: El Paso Children’s Hospital

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