The bankruptcy trustee for Saint Catherine Medical Center Fountain Springs will be able to sell the hospital building and the land on which it sits, a federal judge decided Friday.
In a one-sentence order, U.S. Bankruptcy Judge John J. Thomas, Wilkes-Barre, approved a settlement transferring ownership of the Butler Township property to William G. Schwab, Lehighton.
The settlement represents a victory for Schwab, who had alleged that Saint Catherine Hospital of Pennsylvania LLC, which had filed for bankruptcy on April 9, 2012, and Saint Catherine Healthcare of Pennsylvania LLC, the nominal owner of the 160,000-square-foot building and the 20-acre property at 101 Broad St. on which it sits, operated as a single company.
Schwab reached the settlement with Gary A. Barney, the trustee for the bankruptcy estate of Robert Lane, who had been a member of the board of directors of Saint Catherine Healthcare of Pennsylvania LLC. Lane's estate had been in the U.S. Bankruptcy Court in Wyoming, while the hospital bankruptcy is in the Middle District of Pennsylvania.
The hospital has been closed since Saint Catherine Hospital of Pennsylvania LLC filed for bankruptcy. It asked the court to allow it to reorganize, originally filing the petition as a Chapter 11 reorganization case, but Thomas on April 18, 2012, converted the case to a Chapter 7 liquidation.
The state Department of Health has revoked the 107-bed hospital's license and its approximately 150 employees have been left out of work.
Founded as the State Hospital for Injured Persons of the Anthracite Coal Region at Fountain Springs by the state Legislature in 1879, the construction of the original facility began in May 1880 and was completed in 1882.
Schwab already has raised thousands of dollars by selling the contents of the former hospital.
The agreement means the building and land are part of the bankruptcy estate that Schwab may sell. Proceeds from any sale will be paid to the hospital's creditors and former employees.
Schwab had filed a complaint on Nov. 5, 2012, alleging that there was no real difference between the bankrupt company and the owner of the hospital property, and that Thomas should treat them as one entity.
