Attempts to buy the Pioneer Community Hospital of Patrick have been unsuccessful, and the lender now plans to foreclose on the property.
“Every interested person or entity, more accurately, has basically eventually fallen through” in bids to buy the hospital that closed in September, Town Attorney Chris Corbett told Stuart Town Council members Wednesday.
The company filed bankruptcy in 2016 in Jackson, Miss., according to Corbett, who said an Atlanta, Ga. firm was hired by the bankruptcy court to market the hospital and solicit potential buyers for the facility.
Part of the reason the bids were not successful “may be that there is a big first lien held by Virginia Community Capital on the hospital. That’s not a knock on Virginia Community Capital. They loaned what the hospital wanted to borrow to renovate, but it is a big first lien,” Corbett said.
The VCC is structured as both a non-profit Community Development Financial Institution (CDFI) and a for-profit bank. CDIFs seek lenders to invest in loans to individuals and entities in distressed areas to help spur economic opportunity and revitalize neighborhoods.
The VCC “asked bankruptcy court to abandon the property so that they can exercise their options on it and their options are basically foreclosure,” Corbett said. “I’ve been in touch with VCC and they are being relatively closed mouthed. I think the reason for that is that they packaged this loan and I closed it back several years ago.”
He explained the loan is a package of tax free credits issued by banks that basically “banded together to put up money … and that there is some sort of penalty for getting your money back early. How that really plays, I don’t know.
“I don’t know if VCC is going to act like your normal creditor and get on it quick,” by selling the property to get what they can before there are maintenance and other costs incurred, or whether the original financing package is going to slow things down to a crawl to where we will be here month after month and I’ll be sitting here saying the same thing if anybody wants to listen to me,” Corbett said.
The Centers for Medicare and Medicaid Services (CMS) terminated the hospital’s Certification Number and Critical Access Hospital (CAH) designation in October.
“I don’t know if that’s recoverable,” Corbett said.
He also noted the issued a variance issued by the Virginia Department of Health to extend the hospital’s designation as an Acute Care Hospital is set to expire at the end of the year.
“Licensures are done every day by health care facilities,” but that process requires time and effort, Corbett said, adding “I don’t know what’s going to happen on that score.”
However, “VCC told me that they have gotten calls from entities interested in the building, I guess in appearing at the foreclosure auction. I know the county is talking to folks a little more local, in Richmond, about trying to do something with the building,” Corbett said. “What will happen, I don’t know, but it breaks my heart to drive by that place and see it dark.”
The auction date has not been set.
