A federal bankruptcy court judge Monday approved Steward Health Care’s proposed timetable to auction its 31 hospitals across the U.S., including two in Ohio and one in Pennsylvania, by the middle of August.

Judge Christopher M. Lopez in Houston also dealt with Steward Health’s future financing by approving an emergency request to use a loan tool to engage third-party financers to help keep it afloat while proceeding through Chapter 11 bankruptcy.

In addition Monday, three U.S. senators, including Democrat Sherrod Brown of Ohio, called on the Department of Justice to appoint a trustee to run the system in place of its existing management and to monitor Steward Health’s bankruptcy proceedings “to protect patients and local communities,” a news release states.

IN COURT

Ahead of Monday’s hearing, objections to the proposed bidding and sale procedures were resolved.

“Today, we are just outlining procedures and process, and that is what this motion is really about … we are picking a process that will allow parties’ rights and provide transparency to the process,” Lopez said.

The timetable calls for a June 24 bid deadline, June 27 auction and July 11 sale for Steward Health’s hospitals in Ohio and Pennsylvania — Trumbull Regional Medical Center in Warren, Hillside Rehabilitation Hospital in Howland and Sharon Regional Medical Center in downtown Sharon, Pa. — as well as facilities in Massachusetts, Arizona, Arkansas and Louisiana.

For Steward Health’s facilities in Florida and Texas, there is a bid deadline of Aug. 12, auction scheduled for Aug. 14 and sale hearing set for Aug. 22.

FINANCING

When Steward Health filed for bankruptcy protection May 6, its landlord, Medical Trust Properties, agreed to $75 million in debtor-in-possession financing to continue operations. However, Medical Trust Properties has not

committed to another $225 million, which was at the company’s discretion to provide, according to a filing Friday in the case from Tyler Cowan, global head of restructuring and liability management at Lazard Freres & Co., a financial firm hired by Steward Health.

In the filing, he asked for a “comprehensive funding solution” that guarantees third-party lenders interested in providing a long-term loan would be reimbursed expenses and fees for their work to develop a package, as well as a commitment fee to the lender with the best financing to encourage a competitive financing market.

A $25 million financing proposal Monday was not supported by Cowan, who testified he believed it would have a negative impact on the competitive loan process. Also, it continues the narrative that Steward Health is looking for another bandage to stop the fiscal bleeding, he said.

“From my perspective, this is a liquidity crisis, we run out of money next week. We need to bring in dollars no later than Tuesday, and if we don’t get the relief today, I am very concerned the four parties in our competitive process are going to go pens down and not do any more work,” Cowan said, leaving Steward Health “up against the wall with only one source of capital and that’s from secured lenders inside the structure, who for the last few months have shown an unwillingness to give us capital.”

Lopez approved the request, but cautioned everyone to “use the relief judiciously.”

“If this is what is going to create a robust, competitive process, I’m all for it. It allows everyone to put their best cards on the table sooner rather than later,” Lopez said, adding it adds a layer of comfort in bidding and through the bankruptcy process not to have to worry about financing.

TRUSTEE

Brown and Democratic U.S. Sens. Elizabeth Warren and Ed Markey from Massachusetts, called on the U.S. Trustee Program, which is part of the Justice Department, to appoint “as quickly as possible” a trustee to run Steward Health, according to a letter

And as the bankruptcy progresses, they ask the program to “use every legal tool available, including working with parties in the bankruptcy, as well as state and local officials, to ensure, to the maximum extent of the law, that patients and workers are protected,” the letter states.

Last week, Brown in a letter to Steward Health CEO Ralph de la Torre demanded the company develop a plan to ensure “continuity of care for patients and economic certainty for workers” and the Mahoning Valley.

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