On March 24 a bankruptcy court approved the plan for Calais Regional Hospital (CRH) to be purchased by Down East Community Hospital (DECH) of Machias, with Mark Stickney of Spinglass Management Group appointed as the plan officer. CRH will become the Calais Community Hospital (CCH) under the plan.
     DECH President and CEO Steve Lail states, "We are pleased with the court's decision and are eager to get started. The court appointed plan officer, Mark Stickney, has assigned a Management Service Agreement with Calais Community Hospital, which allows us to provide management services to CRH until the closing of the sale, which is scheduled to take place in June. Our senior leaders began those services today. We look forward to this new journey and to building new relationships with the staff at CRH and the Calais community."
     The court ruling by U.S. Bankruptcy Court Judge Michael Fagone took place after a virtual meeting that morning of legal representatives of numerous parties affiliated with the bankruptcy and purchase plan. Representatives included: Calais Regional Hospital, DECH, the committee of unsecured creditors, Katahdin Trust Company, U.S. Department of Agriculture, state agencies including the Department of Health and Human Services, Anthem Health Plans of Maine and First National Bank.
     In addition to the above parties, attorneys George Marcus and John Doyle of Marcus/Clegg are representing CRH CEO Rodney Boula, who has filed a request for payment of administrative expense. Boula, who has served as the hospital's CEO for the past five years, entered into an employment contract with CRH in February 2019, to encompass the years of 2019 2022, to restructure and turn around the hospital through bankruptcy proceedings. With the likely sale of the hospital on March 31 or before, Boula's claim states that he is entitled to a total of $285,173, comprised of: unpaid salary of $9,214; accrued and unpaid personal time of $48,461; and accrued deferred compensation of $227,497 that is payable upon termination of his employment contract.      The court filing states, "Although the employment contract has not been and is not expected to be assumed by the debtor... the debtor is nevertheless obligated to pay Mr. Boula... all salary and benefits to which he is entitled."
     Jeremy Fisher, representing the committee of unsecured creditors, led most of the hearing's discussion with Judge Fagone, outlining the changes to the docket.
     Anthem, which had filed an objection to the purchase plan because of administrative expenses and reimbursements related to insurance claims from 2018 to 2021, has resolved its objection with new language agreeable to all parties and now approves of the plan. Eric Goldstein, representing Anthem, explained to the court that new language allows for a few different scenarios to play out according to how the court rules and that all parties find those scenarios acceptable.
     Fisher then noted that the nursing associations representing CRH employees had their collective bargaining issues resolved and have now filed in support of the plan. Legal representatives took an hour break from the hearing to finalize language and returned with full anticipation that the revised version would be acceptable to their clients. However, the lawyer representing the new entity, Calais Community Hospital, asked the court for time to confer with his client before the court made a judgment, but also stated that he did not anticipate any setbacks from that conversation, as proved to be the case when the court reconvened later in the day.
     The plan submitted by DECH to the bankruptcy court suggested that reaching an agreement prior to March 31 is an essential component to the plan in order for DECH and the renamed Calais Community Hospital to access the federal Paycheck Protection Program (PPP) by that program's deadline. Currently CRH is not eligible to apply for PPP funds because of its Chapter 11 status, although it has received, as of October 31, $4.6 million in federal stimulus payments since the onset of the COVID-19 pandemic. The court filing states, "If the plan can be confirmed and the effective date occurs before March 31, 2021, a significant source of value, perhaps in excess of $1.7 million, will be unlocked and available to continue hospital operations, preserve jobs, maintain patient care and maximize creditor recoveries."
     In addition, DECH states in its court filings that USDA Rural Development has agreed to provide $3.7 million in start-up capital to Calais Community Hospital and has also agreed to provide a promissory note to fund operational expenses and debt service. DECH CEO Lail states in the court filing, "I believe that this agreement with USDA, as well as other operational changes that CCH will implement in the upcoming months, will create a financially stable hospital, among other medical services, that offers high-quality healthcare to residents in Washington County."