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Healthcare

Forest Park Austin’s Real Estate Property Owner Files For Bankruptcy

The real estate property owner of Forest Park Medical Center’s yet-to-open Austin hospital filed for Chapter 11 bankruptcy this week after accruing about half a million dollars in debt.
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The real estate property owner of Forest Park Medical Center’s yet-to-open Austin hospital filed for Chapter 11 bankruptcy this week after accruing about half a million dollars in debt.

A court filing in the Western District of Texas shows that FPMC Austin Realty Partners, LP. requested Chapter 11 protection on Tuesday. The listed attorney, San Antonio-based Raymond Battaglia, did not return a phone call Wednesday afternoon.

According to the filing, the real estate entity owes 11 creditors just over $500,000 and lists assets worth between $100 million and $500 million. Forest Park’s Dallas, Fort Worth, Frisco, Austin, and San Antonio holding companies have now all filed for Chapter 11. In addition, Frisco’s operating company filed for bankruptcy last summer and is continuing its operations because of $18 million loaned by the real estate investment trust that owns the hospital, Sabra Texas Holdings. Dallas and San Antonio are no longer operating.

The only remaining facility in the ultra-luxury, physician owned hospital chain that has yet to file for Chapter 11 is Southlake.

Austin never actually opened its doors, sitting empty at the corner of Interstate 35 and the Texas State Highway 45 toll road near Round Rock for more than a year. At one point last summer, the lead contractor, Adolfson & Peterson, and its subcontractors had placed 20 liens on the property worth about $1 million. They’re the largest unsecured creditor in the bankruptcy filing—FPMC reportedly owes them $217,631.90. A spokesperson for the company did not return a phone call Wednesday seeking comment.

Corbett Nichter, the head of A&P’s Gulf States Region, said last year that those 20 liens had been paid off and that construction had resumed. But the relationship between Forest Park’s management company and the physician investors had soured. The doctors had grown frustrated that the facility was so past due. Its CEO, John O’Neill, abruptly resigned at the end of July and took a job leading Shriners Hospital for Children, in Boston.

Todd Furniss, chairman of The Management Company at Forest Park Medical Center, said last year that a deal had been reached with the Austin doctors to where the hospital would be sold to an outside party and a different management company would take over operations. Forest Park would effectively walk away. Its logo was never even installed on the building. Derrick Evers, the ousted CEO of Forest Park’s real estate development firm The Neal Richards Group, has said that financing was always a problem in Austin and tossed a barb at the management company.

“The primary reason the Austin hospital does not already have a Certificate of Occupancy is the management company for Forest Park fell woefully short on its obligation to secure equipment and working capital financing,” he said in a statement last year. “The absence of this critical financing prevented our team from completing the building, and ultimately resulted in the continuing delay in opening the hospital. Our understanding is that financing is still not in place.”

Furniss blamed the problems on Evers and his team, telling D CEO that they “were unable or unwilling to solve the problem, or they just didn’t have the acumen to solve the problem.”

The Neal Richards Group, of which Furniss now serves as CEO, is listed as the second largest unsecured creditor on the filing. It’s owed $167,542.78.

The problems plaguing the Forest Park brand now extend all the way from Collin County down to Bexar County. Employees from both San Antonio and Dallas have filed class action lawsuits alleging that the operators failed to give sufficient notice of layoffs before shutting down. San Antonio closed in mid-October and Dallas shut its doors about two weeks later. The Texas Workforce Adjustment and Retraining Notification act requires employers to provide at least 60 days notice before laying off employees if aware of their dire financial status. Furniss has said that its creditors stopped allowing the Forest Park facilities to draw from revolving lines of credit.

Too, The San Antonio Express News reports that a planned sale of the San Antonio hospital fell apart when the lender, Texas Capital Bank, “neither accepted nor rejected the offer.”

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