Sound Shore bankruptcy:
CEO, others issued big checks before filing
2 checks issued days before Chapter 11 filing
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The Sound Shore Medical Center in New Rochelle, photographed March 17, 2011. / File/The Journal News
Sound Shore Medical Center gave its chief executive officer two large checks days before he led it into bankruptcy, court records show.
Two payments totaling $82,815 are detailed in court papers that also noted John Spicer’s biweekly salary of $32,644.24. The June 28 filing in the U.S. Bankruptcy Court showed that Spicer got his regular salary payments May 2 and 16, then two payments totaling $82,815 a little over a week later, on May 24.
The hospital’s interim chief financial officer and its in-house counsel also received payments May 24.
Their payments matched the biweekly salary payments they received May 2 and 16.
The court papers don’t explain why the May 24 sums were paid to the executives.
The Journal News made repeated attempts, starting July 2, to get an explanation from the hospital.
On Monday, Amy Cassidy, a senior vice president at the hospital, finally responded to a reporter’s inquiries but said she needed more time to research the payments.
“No one received any last-minute payments before the bankruptcy,” Cassidy insisted.
The New Rochelle-based network, which also runs Mount Vernon Hospital, filed for Chapter 11 bankruptcy protection May 29 as part of a planned sale to the Bronx-based Montefiore health network for $58.75 million.
Sound Shore and its related entities have about $200 million in debts owed to more than 3,000 creditors, and only about $159.6 million in assets.
Sound Shore owes big sums to the New York State Nurses Association’s pension fund and 1199SEIU United Healthcare Workers East, among other major creditors.
Mindy Berman, 1199SEIU’s communication director, said the union is monitoring the bankruptcy as it moves through the court but declined to comment on the payouts to the executives.
Alston & Bird represents the committee of Sound Shore’s biggest unsecured creditors. Craig Freeman, an attorney with the firm, also declined to discuss the matter.
Doug Sauer, chief executive officer of the New York Council of Nonprofits Inc., said that it’s not unusual for corporate leaders to get payments right before a bankruptcy filing.
“The argument those corporations will make is that they need to keep that executive through that bankruptcy,” Sauer said.
Even if the pre-bankruptcy payments to Spicer and other top executives were unused vacation time or some other legitimate compensation, however, it’s not good public relations, Sauer said.
“You’re fostering the perception that there’s something fishy or wrong,” Sauer said.
Via Lohud.com (link)
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