Partner Joseph L. Schwartz, Chair of Riker Danzig’s Bankruptcy Practice, was quoted in the Wall Street Journal on December 11, 2024 in an article titled “CarePoint Creditors, Regulator Seek to Oust Directors from Rival Hospital Operator.”
The article discussed a hearing before the Bankruptcy Court at which objections were raised regarding governance issues created by Hudson Regional Hospital (HRH) having three seats on the board of CarePoint Health, which is in bankruptcy. HRH is not only a competitor, being the owner of a hospital in Secaucus, but is a prepetition creditor of the Debtors, the Debtors’ post-petition lender, the proposed acquirer of debtor Bayonne Hospital, the proposed manager of the Debtors and the Bayonne debtors’ landlord.
Joseph Schwartz, as counsel for the New Jersey Department of Health, argued before the Bankruptcy Court that HRH’s wearing of these different hats while sitting on the CarePoint Health board is problematic and presents an “obvious conflict.” He added that HRH representatives could not fulfil their fiduciary duties to CarePoint Health and its creditors as board members. As a result, Joe asserted that HRH should remove its employees from the CarePoint Health board.
The article noted the concurring opinion of the CarePoint Health official unsecured creditors’ committee, which said these multiple roles “are absolutely in tension.”
According to the article, CarePoint Health plans to address the matter with its board in the coming days.
Read the full article at Wall Street Journal (subscription required).
