Healthbridge to Apply Chapter 11 Plan to Reorganize Nursing Homes
NEWINGTON - The U.S. Bankruptcy Court in Newark, N.J., has already shielded HealthBridge Management from contempt of court sanctions, and now it has given the company the go-ahead to apply its Chapter 11 plan for reorganization for the nursing homes it manages in Newington, Danbury, Milford, Westport and Stamford.
HealthBridge, which recently fought off U.S. District Court Judge Chatigny’s contempt of court ruling for not restoring the terms of the former labor contract when members of the New England Health Care Employees Union, District 1199 returned to work, ending a strike that began when the company halted labor negotiations and imposed new conditions two years ago, made the announcement through a press release March 5.
“We are pleased that the Court has agreed to confirm our Chapter 11 Plan with limited modifications clearing the way for us to officially exit bankruptcy, hopefully by the end of this week,” said HealthBridge spokesman Ed Remillard in the statement. “We will exit bankruptcy having gained relief from unsustainable and restrictive SEIU labor agreements that have hamstrung the Centers’ flexibility and competitiveness. Under the Plan, the Centers will have a competitive and durable cost structure and the Centers will be well-positioned to serve the needs of our patients, maintain our 1,100 employees and compete successfully in Connecticut.”
Under the plan, HealthBridge will see a $67 million “cash infusion” from “affiliated entities,” according to the press release. Creditors will be able to cover 75 percent on its claims, the statement said.
The strike, which involved around 700 of the unionized employees working at the Connecticut centers, was prompted by HealthBridge’s decision to enact changes that included a reduced work week--from 40 hours to 37, due to the elimination of paid lunch breaks--a 50 percent cut in sick days, higher health benefit deductibles, and a switch from a former employee pension plan to a 401K.
The National Labor Relations Board is still in court with HealthBridge, but the logic behind the restraining order issued by Judge Chatigny, requiring that the workers be offered their jobs back under the pre-strike conditions, was to ensure that salaries and benefits would not be halted throughout the entire duration of what is expected to be a lengthy legal process, said Union Spokesperson Deborah Chernoff in earlier interviews.
After HealthBridge filed for Chapter 11 Bankruptcy, the New Jersey court suspended the injunction and then issued a series of temporary extensions that, effectively, made the move indefinite. The U.S. District Court recently ordered that the company reinstate the agreement, as well as provide back pay and benefits with interest.
The Hartford Courant previously reported minimums of $2.3 million in losses at each of five Connecticut nursing homes from which employees went on strike in the fiscal year that ended Sept. 29, 2012. Strike preparation, including $12.5 million spent to hire replacement workers, coupled with declining revenues at the highlighted homes, contributed to the company’s financial woes, according to The Courant.
HealthBridge was given a $5 million financing agreement aimed at preserving the necessary functions of its facilities while it undergoes Chapter 11 reorganization--a restructuring of debt that allows a business to continue operating.