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Money fight starts in North Philly Health System bankruptcy

There is not much money to fight over in the bankruptcy of North Philadelphia Health System, which owed $24.8 million to its 30 largest unsecured creditors, according to its Dec. 30 filing.

That explains the intense interest in the $692,000 that NPHS received from a New Jersey trust last Thursday.

Before a hearing on the matter Wednesday in Center City, NPHS and three creditor groups reached a preliminary deal, which they detailed in U.S. Bankruptcy Judge Magdeline D. Coleman's courtroom.

Here is the arrangement: $200,000 will be held by NPHS, but not spent; $100,000 will go into a fund controlled by the mortgage service to be used for insurance; and $392,000 can be used as needed by NPHS to meet payroll and pay vendors, though the health system is expected to tap only $100,000 to $200,000.

The final decision on who has rights to the money, which came from a trust established in 1916 by the will of a Burlington County businessman named Charles English, will be made next week.

"I'm prepared to rule on the issue," Coleman said.

English was the co-owner of Uhler & English, a manufacturer of rigging ropes and twines for the maritime industry at a site now occupied by a Holiday Inn Express at Penn's Landing in Philadelphia, according to a filing by the unsecured-creditors committee in the NPHS bankruptcy.

NPHS was not the only beneficiary of English's trust. Equal amounts were paid to a New Jersey fund for "Infirm Clergymen, Widows and Orphans of the Episcopal Church," the Masonic Home of New Jersey, and Burlington County Hospital, now part of Virtua.

NPHS received the money as successor to the former Children's Homeopathic Hospital, which was at North Franklin and West Thompson Streets in Philadelphia, the current location of Girard Medical Center.

The distribution was triggered two years ago, but had to make its way through court in New Jersey.

The unsecured creditors — the biggest of which, Independence Blue Cross,  is owed more than $10 million —  are fighting, initial filings said,  specifically to keep that money out of the hands of Gemino Healthcare Finance LLC, which gave NPHS an $8.5 million secured revolving line of credit and is in line to lend NPHS the money it needs to get through bankruptcy.

NPHS also owes $11 million on a federally insured mortgage. Hunt Mortgage Group said the money from the English trust should be part of the pool of cash used to satisfy that debt.

Unsecured creditors have filed $11.5 million in claims, but that does not include a claim from IBC.

NPHS has not yet filed its statement of financial affairs, which will provide more detail of the tax-exempt organization's financial condition at the time of the bankruptcy filing on Dec. 30.