Sheehan Memorial Hospital, the Michigan Avenue hospital that closed earlier this summer, has filed for bankruptcy in a move that the company’s attorney said is expected to clear the way for an auction to sell the property.
Sheehan Memorial filed for a Chapter 11 bankruptcy reorganization Friday, listing $6.3 million in assets and liabilities totaling nearly $5.5 million, according to documents filed with the U.S. Bankruptcy Court in Buffalo. Sheehan’s biggest asset is its real estate, which includes the 270,000-square-foot hospital and its 8-acre site.
“The purpose of the bankruptcy is to sell the building and achieve some money for creditors,” said Garry Graber, the attorney for Sheehan Memorial. “We’re hoping somebody will have a use” for the building, he said.
The company operated the Sheehan Health Network, which announced its closing in March after surviving for 128 years while often treating the city’s poorest and most under-served population at the edge of downtown Buffalo.
Sheehan had faced financial hardships for more than a decade, leading to an earlier bankruptcy filing in the early 2000s. Sheehan officials blamed their financial struggles on shifting populations, reduced Medicaid and Medicare reimbursement rates, and monetary penalties imposed before the facility emerged from bankruptcy in 2006.
The latest bankruptcy filing likely will lead to an auction of the hospital property. Graber said discussions are ongoing with a potential bidder whose initial offer would serve as a starting point for the auction process.
More than half of Sheehan’s liabilities are in secured claims, including $1.9 million that New York State is owed for Medicaid overpayments. Sheehan also owes $485,100 to General Electric Capital Corp. and $291,800 to Omnicare of Western New York in other secured claims.
The bankruptcy filing listed the Internal Revenue Service as Sheehan Memorial’s biggest single unsecured creditor; the IRS is owed more than $845,000 in taxes. The company also owes nearly $215,000 to Family Medicine – State University of New York at Buffalo, more than $93,000 to the state Labor Department for unemployment insurance payments and more than $126,600 to National Grid.