A bankruptcy judge in Philadelphia approved the sale of North Philadelphia Health System's shuttered St. Joseph's Hospital for $8.1 million to an affiliate of Philadelphia real estate developers MMPartners LLC, according to an order published Thursday.
All but $250,000 of the net proceeds from the sale, expected to close on or before April 7, will be used to pay down the $11 millions owed on a mortgage backed by the U.S. Department of Housing and Urban Development. The Philadelphia Water Revenue Bureau and Philadelphia Gas works are owed about $250,000 for services to the building at Sixteenth Street and Girard Avenue.
At a hearing Wednesday, a lawyer for North Philadelphia Health System told U.S. Bankruptcy Judge Magdeline D. Coleman that management wanted to put $5 million of the proceeds toward the mortgage — which is secured by all of NPHS's real estate — with the rest of the money going into escrow.
Coleman was skeptical.
"Just intuitively, it doesn't make sense that secured creditor doesn't get paid," she said at the hearing.
NPHS has additional property, including Girard Medical Center, at 801 W. Girard Ave., which is still operating as a drug treatment and behavioral health facility, that is valued at $29.39 million, according to bankruptcy documents.
Unsecured creditors are owed $29 million.