The financially troubled Lake Shore Health Care Center in Irving will have access to enough money to stay open at least through Feb. 3 while a prospective ownership group conducts its due diligence and decides whether to make a purchase offer for the hospital.
Lake Shore hospital soon can draw down on the last $314,000 of the money advanced by its parent company and an affiliated hospital and, later, is expected to have access to $1 million promised by the State Dormitory Authority.
The hospital was granted the financial lifeline Wednesday in U.S. Bankruptcy Court in Buffalo, where seven attorneys representing the various parties in the case held a 90-minute, closed-door discussion prior to a hearing before U.S. Bankruptcy Court Chief Judge Carl L. Bucki.
Wednesday’s hearing did not settle the fate of Lake Shore, which is running out of cash. Its operator, TLC Health Network, which also includes a nursing home and several affiliated facilities, filed for reorganizational bankruptcy in December, citing more than $9 million in losses for 2013.
Lake Erie Regional Health System of New York announced plans in October to close Lake Shore this month but later split off Lake Shore as a separate entity and, with the bankruptcy filing, indicated its willingness to find a buyer that would keep Lake Shore open.
Lake Erie Regional’s other hospital, Brooks Memorial Hospital in Dunkirk, loaned $3.7 million to Lake Shore last year.
At Wednesday’s hearing, attorneys for Brooks, the Dormitory Authority, TLC and other parties sought to reach an agreement on the order in which the various creditors would be repaid.
They came to an informal compromise, subject to a written order that still must be approved by Bucki, who set a return date of Feb. 3.
The Dormitory Authority money would be accessed after the Brooks money runs out and, together, could allow the hospital to remain open into March. The potential ownership group has begun its due diligence and may have its decision by then.