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Brown County court approves foreclosure decree on Southwest Healthcare properties, including hospital

GEORGETOWN — The Brown County Hospital and all of the property assets owned by Southwest Healthcare of Brown County Ohio LLC have been foreclosed on.

The Brown County Court of Common Pleas granted summary judgment on November 25 to Brown County Treasurer Connie Patrick on her foreclosure complaint on Southwest Healthcare’s remaining assets, which include massive debts to numerous creditors and large amounts of unpaid taxes to the state of Ohio.

Summary judgment is a decision made by a judge that determines there are enough facts in a case to make a ruling without a trial.

The summary judgment decree made by Judge Scott T. Gusweiler and Magistrate Kenneth Zuk support’s Patrick’s claim to a total of 470,813.72 in delinquent taxes owed by Southwest Healthcare for their five properties.

The property that includes the hospital in Georgetown owes $385,099.85 in unpaid taxes alone. Southwest Healthcare’s property at 111 Vandament Way, Mt. Orab owes $47,846.27, the property in an open lot next to the Mt. Orab location owes $13,869.47, another property on neighboring Leninger St. owes $14,945.17, and a piece of property at 19589 U.S. Route 68 in Fayetteville owes $9,053.59 in taxes.

Gusweiler wrote that these liens on the properties were the top priority to be repaid when the properties eventually sell.

The court of common pleas appointed Cincinnati-based New Growth Advisors to serve as Southwest Healthcare’s receiver on May 21, 2015, and since then New Growth Advisors has been in charge of maintaining the hospital, Southwest Healthcare’s other assets, and finding buyers for the assets.

A fact that recently came to light in the most recent receiver’s report is an undisclosed entity made a $250,000 bid in September for the entirety of Southwest Healthcare’s assets. The bid was rejected by New Growth Advisors.

“We felt that it wasn’t commercially reasonable so we weren’t able to support that offer,” New Growth Advisors Project Manager Jennifer Brauer said.

In addition, the receiver’s report showed that New Growth Advisors has entered into real estate agreements with Everest Commercial Real Estate, with New Growth Advisors President Sumner “Sonny” Saeks serving as a licensed agent. The initial real estate filings show the hospital campus in Georgetown listed at $2 million, the property in Bethel listed at $400,000, the property in Bethel listed $75,000, and the three Mt. Orab parcels of land are listed at $500,000.

According to Brauer, at the present time, there are two healthcare entities interested in purchasing the property upon which the hospital sits. One entity is from Cincinnati, while the other one is from outside of the region. Neither of the two entities have made written offers, but the dialogue between the entities and New Growth Advisors is continuing.

But Brauer and New Growth Advisors are running out of time. She admitted that numerous entities have toured the facilities, but all but the two currently interested and the one that gave a low offer decided to pass, and with each passing day, it’s becoming harder for New Growth Advisors to recoup as much money as they can from the sale of the properties to repay the taxes and the multitude of creditors.

There’s as many as 21 creditors looking to recover funds owed to them by Southwest Healthcare, according to court documents.

In the foreclosure decree, Gusweiler wrote that Patrick can request a county sale of Southwest Healthcare’s assets as soon as February 1, though Brown County Prosecuting Attorney Jessica Little noted at a Brown County Commissioners meeting that Patrick could push that potential filing date back, should New Growth Advisors be close to a private sale of the assets.

“If it looks like (the receiver) is doing a good job marketing it and there is some interest, she has the option to wait to ask for a sheriff’s sale,” Little said.

If the county is approved to sell the assets, according to Patrick, it would go through a Sheriff’s sale and be up for auction, though if the county doesn’t feel the auction bids are acceptable, they can reject them.

Despite the soft deadline ahead, Brauer is confident that New Growth Advisors will find a buyer.

“I am absolutely confident that we will be able to sell the assets,” Brauer said. “In what form, I can’t say. It’s my hope that we’ll able to sell the hospital campus to a health care operator, but I can’t guarantee that’s the end result. Could be sold to an investment group or some other entity.

“We are hired to get the highest and best recovery for the creditors. So it could be an investment group, or something else. But it is absolutely our intention to if at all possible find a health care buyer.”

If Southwest Healthcare’s assets do not sell for the minimum bid, which would be around $470,000 plus court costs at the sheriff’s sale, the properties would then be surrendered to the state and it would be put on the list for an auditor’s sale. The state would lose the ability to recoup taxes if it gets to that point.

In a related decision to the foreclosure case, Brown County had a summary judgment motion denied to have the court order New Growth Advisors to pay “past and present contributions” to the Ohio Public Employee Retirement System, a total of 28,108.13. Zuk denied the summary judgment motion because the county is “not entitled to (the) judgment as a matter of law.”

Zuk went on to write that the claim for money owed to OPERS would be considered along with the rest of the creditors when the sale of Southwest Healthcare’s assets are finally resolved.

This news is the latest in a series of unpleasant news that has followed Southwest Healthcare since it’s ultimate demise in late 2014.

The cracks in the system were showing in September 2014 as creditors began removing furniture and medical equipment from the hospital due to unpaid loans, only for the hospital’s administration to save the equipment with a last-minute agreement with the creditors.

But by September 26, 2014, enough creditors became impatient and a court order allowed for Southwest Healthcare’s income to be garnished. When the administration woke up that morning, they found an empty payroll fund in their bank accounts, and closed the hospital, as they were unable to pay their employees.

Since then, it’s been a never-ending stream of creditors lining up in court, filing complaints to win back money they were owed for loaning equipment or employees to the hospital, while the administration has all jumped ship and left town.

Last March, Patrick filed her foreclosure complaint on the Southwest Healthcare properties with delinquent taxes, and an amended complaint was filed on May 21, 2015.

The Federal Bureau of Investigation raided Southwest Regional Medical Center on September 29, 2015as part of a sealed search warrant, removing computers and other administrative records.

Patrick revealed in an interview that back in July 2013, her office and the Southwest Healthcare administration had discussed a payment plan for delinquent taxes.

“We sent all the paperwork but we got no response,” Patrick said.

The land upon which Southwest Regional Medical Center, formerly known as the Brown County Hospital, sits on was foreclosed upon last week after the Brown County Court of Common Pleas approved a summary judgment motion for foreclosure.
http://newsdemocrat.com/wp-content/uploads/2015/12/web1_BrownCountyHospital.jpgThe land upon which Southwest Regional Medical Center, formerly known as the Brown County Hospital, sits on was foreclosed upon last week after the Brown County Court of Common Pleas approved a summary judgment motion for foreclosure.
Receiver rejects $250,000 offer

By Daniel Karell

dkarell@civitasmedia.com

Reach Daniel Karell at 937-378-6161. Follow him on Twitter @GNDKarell

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