Steward Health Care System, a private company and a lessee of Medical Properties Trust, Inc. (MPW), announced on Monday that it has applied for Chapter 11 bankruptcy protection at the U.S. Bankruptcy Court in the Southern District of Texas. The company's decision to file for bankruptcy was motivated by increasing costs, including labor, materials, and operations, inadequate government payer reimbursements, the ongoing effects of the Covid-19 pandemic, and other factors.
Under the terms of the bankruptcy filing, Steward Health Care System plans to secure debtor-in-possession financing from the Medical Properties Trust, beginning with an investment of $75 million and possibly an additional $225 million later on. MPW's stocks traded down 18.89 percent at $3.95 in New York's pre-market trade.
In the past, Steward Health has struggled with various financial challenges. For example, in January 2024, Medical Properties Trust reported that Steward owed around $50 million in back rent.
Ralph de la Torre, Steward's CEO, stated, "Over the past few months, we've obtained bridge financing and advanced the sale of our Stewardship Health business to help bring stability to our hospitals. With the delay in the closure of the Stewardship Health deal, Steward was compelled to seek alternative ways to keep its operations running."
Despite the bankruptcy filing, Steward anticipates no interruptions to its daily activities, which will proceed as usual throughout the Chapter 11 process.
