The Justice Department is objecting to Steward Health Care's proposed bankruptcy financing plan, saying it needs time to review the sale of Steward's assets — particularly Optum's bid to purchase Stewardship Health.
The proposed plan, in which for-profit Steward could borrow up to $300 million from landlord Medical Properties Trust, sets "an aggressive schedule" for sales that could undermine federal regulators' right to review potential deals, Principal Deputy Assistant Attorney General Brian Boynton said in a Tuesday court filing.
Related: Steward Health Care facilities attracting potential buyers
Steward filed for Chapter 11 bankruptcy protection earlier this month and is looking to sell all assets in the next few months, including the Stewardship Health physician network, 31 hospitals and approximately 400 other facilities.
The Dallas-based health system is in advanced discussions with UnitedHealth Group's Optum about a "stalking horse" bid to buy Stewardship Health. A stalking horse bid is the initial bid on a bankrupt company's assets and helps set the minimum price for other potential buyers.
Steward's financing plan should acknowledge federal regulators' ongoing review of the proposed Optum deal and not allow a sale until that review is complete, Boynton said in Tuesday's filing.
"At the very least, the United States reserves its rights to conduct a full antitrust review and, if necessary, file an enforcement action concerning the proposed sale regardless of any milestones agreed to by [Steward] and [Medical Properties Trust]," Boynton said.
Steward filed for bankruptcy protection after months of financial turmoil and unpaid bills. The health system employs about 30,000 people, including 4,500 primary and specialty care physicians, and serves more than 2 million patients across eight states. Medical Properties Trust, which owns 10% of Steward, has approved $75 million in debtor-in-possession financing to fund healthcare operations.
