HomeMy WebLinkAbout1988 - 1989
WY of DENTON~TBXAS MUNICIPAL BUILCINa I OENTON, TEXAS 78201 / TELEPHONE (817) 8888907
0111ce of the City Manager
October 3, 1989
1
Roy Appleton III
Mewber
Flow Regional Medical Center, Inc,
Advisory Council
820 Greenwood
Denton, TX 76201
RE: Communications Between Sennett Kirk and the City of Denton
Regarding $2000000 Allegedly Owed to Flow Regional
Medical Center, Inc,
Dear ML,-&p on; 47
Recently, an exchange of letters has occurred between 8annott
Kirk, Chairman of the Board of Flow Regional Medical Center,
Inc, and the City of Denton. These letters involve a dispute
regarding $200,000 which was allocated for a service contract
between the the hospital and the City as provided for in the
original transfer agreement.
I think the circumstances surrounding this issue are adequately
set forth in Bennett Kirk's letter to the City dated September
15, 1989, and the City's response of September 22, 1989.
The Mayor and City Council asked that each member of the Flow
Regional Medical Center, Ina. Advisory council be furnished a
copy of these pieces of correspondence so that everyone is
fully informed of the issue under discussion, The Mayor and
City Council desire to support actions taken by the Board but
do face legal constraints in allocating tax funds. Tharefora,
they felt that you, as an Advisory Council member, should have
a complete understanding of this issue,
i
Roy Appleton Y1(
October 3, 1989
Page 2
Should any member of the Advisory Council have further
questions about this matter, please feel free to contact Mayor
Ray Stephens, any member of the City Council or me.
Thank you for your consideration.
Very t ly yours,
Lloyd V. Harrell
City Manager
LVH:bw
47244
Attalrhmente
ac; Mayor and City Council
Sennett Kirk, Chairman of the 'aoard
F~~ ; . ,
13 10 Scripture Street
Denton. EiOSP[TAL TX '18201
•I817) 387.8881
September ib, 1989
Mr. Lloyd Harrell, City Manager
City of Denton
216 S. McKinney
Denton, Texas 76201
Dear Lloyd,
At a meeting with you in October of last year, you indicated
to me the City had appropriated the $200,000 which was to be paid
to Flow Regional Medical Center, Inc. on October to 1988, in
accordance with the service contract between the Hospital and the
City as provided for in the original transfer agreement. Further,
you indicated you were only esorowing these funds until a more
definite picture emerged regarding Flow's financial position; the
City, you said, wanted to be sure that the Hospital's assets
exceeded its liabilities before releasing the funds.
Because of this conversation and these representations,, our
Board has labored under the mistaken understanding that the City
of Denton intended to honor this obligation and, therefore, has
not vigorously pursued it. Last week, in a memo between Scott
Smith and Ma. Drayovitoh, it was brought to our attention that
the City of Denton has no such intention. In fact, the City of
Denton evidently has employed outside counsel in an effort to
avoid payment altogether or to have the amount drastically
reduced.
This revelation comes as a total shook to our Board and
pretty much destroys any spirit of cooperation we feel in our
attempt to unwind the affairs of Denton's Oity/County Hospital4
therefore, by copy of this letter, we are instructing our
tc,nsel to take immediate and appropriate action to resolve this
matter.
1
Since
~LY
//ail
Sennet Kirk
Chairman of the Board
SKtot
col Mike Griffin
Miller Davidge
WIT of DMON, FBX48 MUNICIPAL 81XLDINO / 05WON, TEXAS 76201 / TELEPHONE(817) 688.8307
011100 01Ihe Clly Manager
September 22, 1989
r"
Sennett Kirk
Chairman of the Board
Flow Regional Medical Center, Ina,
101. S. Locust
Denton, TX 76201
Dear Sennett;
I am in receipt of your letter of September 15, 1989, and feel
that Some clarification of the facts cited therein is
requited. First let me recite the history of the transaction
involving the $200,000 under dispute,
In the late fall of 1987, the City of Denton very diligently
worked to find the funds that Flow Memorial Hospital Board
contended it needed for Flow to survive, part of that effort
involved granting to the hospital City funds amounting to
$200000 plus making various concessions regarding outstanding
utility bills. In addition) the City worked with the Flow
Foundation and First State Bank to structure a loan which would
get the hospital the additional amount which it said was
required. This arrangement involved First State Bank loaning
the hospital the funds which were guaranteed by the Flow
Foundation, In return, the City of Denton agreed to pay to
Flow Hospital $200,000 per year provided the hospital continued
to operate pursuant to service contracts with Flow since
legally it was impossible for the City to commit funds to repay
a loan in those circumstances. The funds paid by the City to
the hospital were to be passed on to First State Sank to repay
the amount of money loaned. This is the background in regard
to the $2000000,
In the latter part of September of 1988, Flow Hospital closed
its doors and coaeed operation. At that
due the hospital on October 1 was called inoi# the $2O00
totquestion 0bjour
counsel advised the Mayor and Council that such a payment
should not be made if Flow Hospital was not providing services
to the community on October let and was in default of the
Agresmenta As soon as this information was received, Ray
Stephens and I visited the appropriate parties to inform
Sennett Kirk
September 22, 1989
page 2
them of this situation,
afternoon of September 22Such visits took place on the
22, Such
when the Mayor and t
Lea,
indiv Preeiaenteof wChe F1ow rFoul' of First State Bank, Walter
of the Flow Board. At these meetings, allourself, Chairman
involved were given the same information since each hoof you i n
some way were involved in the payments which had been agreed to
by the city,
f The information provided was that our attorneys had advised
that the $20(10000 should not be paid since on October 1 the
hospital no longer would be offering the services contracted
for by the Cit°j, This is information which was provided to the
three individuzle mentioned above,
any constitutional barriers, we wore Aalltawarelthatethedutility
bills of Flow were in default and our attorneys had already
sent you notice of this default. To the beet of the
recollection of both the Mayor and myself, nothing was
mentioned of our desire to see that the Hospitals assets
WecWantedito Communicate releasin the uofawhich we rather
)cat, learned, t did indicate that the City would appropriate
the $200,000 and should the legal advice change and !.he City be
able to release such funds, such would be available.
Following that meeting, formal bankruptcy was declared and the
sale of the hospital was consummated, on several occasions
during the last year, we have met and no indication was made
that the City was in a position to make the $200,000
the bankruptcy settlement, part of
n fact, Millee was
informed by our legal counsel tnu
mero s monthsragoavthat such
funds should not be considered in the finalization of the
bankruptcy proceedings, At no time during this press
the Flow Foundation, which we understand repaid the ofunds has
the first State Hank, made any claim upon the city,
4uite frankly, Sennett, the City is somewhat perplexed why
Miller Davidge and the Board are pressing so hard for the
payment of this $200,000. Flow Hospital no longer is in
existence despite the best efforts b
including the city. Since the y everyone involved,
2*00 was earma an
appropriate to help Flow survive, th
e0 origi el reasonrfo the
funds no longer exists, to addition, the various liabilitios
of Flow Hospital have been satisfied through the bankruptcy
proceedings, and we have boon assured that the assets from the
sale of the hospital will exceed the liabilities,
Bennett Kirk
September 22, 1989
Page 3
As you know, your attorneys have been negotiating with our
attorneys for quite some time about a reduced settlement of all
claims in this case, I am sorry that this intention comes as a
"total shock to your board and destroys the spirit of
cooperation you feel in your attempt to unwind the affairs of
the Denton city/County hospital,,, It has been, and will
continue
a
smooth transition regarding desire
r~
affairs ofitheyhospitaiarantee
sines iy,
Lloyd V.
Harrell
City Manager
E LVHtbw
4710M
cot Mayor and City Council
Members, Board of Directors,
Flow Regional Medical Center, Inc.
.1:45 D
CfTYofD6NTON ~'EXAS fl
i MUNICIPAL BUILDING / DENTON, TEXAS 76101 / TELEPHONE(817)566.8200
I MEMORANDUM
DATE: December S, 1988
TO: Lloyd V. Harrell, City Manager
FROM; John F. McGrane, Executive Director of Finance
SUBJECT: PLOW REGIONAL MEDICAL CENTER BANKRUPTCY CLAIM
Attached is a copy of the "Proof of Claim" that was submitted to
the Eastern District of the United States Bankruptcy Court by
Ran Clark for the City of Denton, The total amount claimed for
pre-filing past due utility bills is $291,323,13. As you can
see the amount of $47094 listed by the Denton Record Chronicle
in its December 1, 1988 article is incorrec.
If you have any questions regarding this matter, please advise,
n c rane
JFMcG:af
Attachment
4034F DO
l~
C
i
BOf I1
f tam s,as1 nit ~ e5 U ank. cu rmzrt
I Forlbe Rast:ern Disirkl ofT.exas, _Sh rman ni ,i moll
JJJ Inn F10w Regional Medical Center, Inc.
Cue No. 88-42099
lkbror•
PROOF OF CLAIM (SECURED)
1, ( he alaimusF k~r rtfWet ar••
t I NAP tAP
M"Mb as a
~
46 ~
dehs.yasl~w,at.. ,aaa
Ialn~aaolc of aha w~u,usplp,
and 6
I1j dalmdnr is d corporation elmminj through an auihorited offlrerl The undersigned, who resldes at•,
alfthedMU~ yici al Buu,ldws iYg, Dentoq, Texas 071
) 6201
b td ~ the City of Denton, a municipal/
orporation rgsnite n er I e of Texas
and doing busineuat" MLIllicipal puildiI1q Denton Texas 76201
and Is authorl ed to make this proor of clam on belsalrbf the corporation.
(~JNrlrrt U ehrelF
irgemij The umders Cried, who resides t••
ef~s- b+Mloam Fist--
,.aae4le..
2. Tha.debtor was, at the timaof the filing of the petition Initiat ing this case, and still Is !ndebted I or Ilablel to this claimant, In the sum
or s
3. The consideration for this debt IIorr ground of Uiblutyj 6 as followst Provision ofF utility Services,
3~dteIhT,h s MV41fs yof f greemen t alld Iii ~r nip 3m6t~n~lsnd In
addition chuget I or no additional ehulul. (heirtte atl Charges in addition to principal amount of debt, state baru for incluvon end aom•
putatlon, and dal fotth any Met comideMion rtlevanf to the lejolit,Y of the aharje. )
(1Jthr claim rr juunded oon a writing I The wridns on which this ylaim Is founded for o dupllcate (hereop Is attached helco (or an-
•--not beattached- forthe reason set forth In the statement anached'heresob "
S, IlJappropriate) This alatm Is founded on an open account, which became Ior will beeomel due on
, as shown by the hemited statement auached hvitio,
nless It is attached hereto,orlu absmee Is expialned in arrauuhed uatemeru.tto cute w other negotlabielnsuumens hubean iecelsesi lot
she account or any part of it,
6. No judgsaeas hu been rendered on the claim except
1. The amount of a payments of this claim has been credited and deducted for the purpose of making shit proof of claim.
g. This elaLm Is not subject to any setoff or eounteralslrn except None
4, No security Intereu Is held for This cialm except Agreements t Financing Statements &
Deed UE 'Pr st
(!f securUy interrrr In the property of the debtor 0 dalmed l The undenlgned claims the security Interest under the writing referree
to in paragraph A hereof Ior under at separa(e writing lot a duplicate of which) is attached hereto, or under a separate westing which eannot ba
auached hereto (n, the reason act forth In the statement attached hereto(. Evidence of perfection of such security interest is also attach"
hereto,
10. This clalm Is a genetsl unteeured claim, except to the extent that the security Interest, If any, described In puagraph 9Is sufficient it
satisly the eialm. (ljprionly it claimed, stale the amount and bolls therroj. )
Claim No, Total Full Name of Creditor, Denton. Texas
(office use Amount I f 291, 323,13
only)' Claimed Sia,alure -✓r~d<._
Date-
Prneir,r for Prwnitng froudurrnr Clmm, fine of not more than 17.X» or unpmianmeni ter not more than s yeas or both.. Tnu Is. U,S.C 11111,
'tnrtudr Oil MMd used 0 debiot vudrn laird wart. "Starr Mr,hnt W&M,
1D
CITY of DENTONr TEXAS MUNICIPAI. BU1LD1NO / DENTON, TEXAS 16201 / TELEPHONE (8111888.8301
Office of the City Manager
November 11, 1988
John M. Dyer, M.D,, M.P.H.
Assistant Surgeon General
Regional Health Administrator
Department of Health & Human Services
Regional Office VI
1200 Main Tower Building
Dallas, Texas 75202
Re: Loan TX-609
Direct Loan Bond Purchase Agreement
Flow Memorial Hospital
Denton, Texas
Dear Dr, Dyer:
I have referred your letter of November 1, 1988 to our attorneys
for review. As I am sure you may be aware, the Flow Regional
Medical Center has filed bankruptcy proceedings, in which the
Department of Health & Human Services is listed as a secured
creditor. You may wish to file a claim in such proceedings. We
are advised by Flow's attorney that there are sufficient assets
available to satisfy x.11 of the hospital's outstanding debts.
The City's course of action with respect to the Compromise
Settlement Agreement mentioned in your letter will obviously be
influenced by the progression of the bankruptcy proceedings, We
will keep you informed of any decision we make with regard to
payment, although I understand that almost two months remain
before a payment becomes due.
Vmy yours,
CDL Harrel
City Manager
`'`•'LVH; ~a
31521
s
DEPARTMENT OF HEALI-H & HUMAN SERVICES
Public 11.
011h Service
Regional 0(fice VI
1200 Main Tower Building
` ( f tip 00118s, Texas 76202
Nov f 4 1988 November 2, 1988
Mr. Lloyd Harrell 'V?i'ui r' ~1
City Manager C, ryI"-''-I''
City of Denton
Municipal Building
215 East McKinney
Denton, Texas 76201
Re: Loan TX-609
Direct Loan Bond Purchase Agreement
Flow Memorial Hospital
Denton, Texas
Dear Mr. Harrell:
As of December 4, 1987 a COMPROMISE SETTLEMENT AGREEMENT ("Agreement") was
reached IN THE DISTRICT COURT OF DENTON COIJNTY, TEXAS between DENTON COUNTY,
TEXAS, Plaintiff, versus CITY OF DENTON, FLOW MEMORIAL HOSPITAL BOARD,
H, E. FLOW TRUST, and JIM MATTOX, ATTORNEY GENERAL OF THE STATE OF TEXAS,
Defendants. Section 1, CITY COVENANTS, Subsection 1,4 su~tion of Hospital
Debt, of the "Agreement" states the following; As
"Subject to the obligations of the MEDICAL CENTER, the CITY shall assume
fifty percent (50%) of the HOSPITAL BOARD's indebtedness, if any,
outstanding as of December 31, 1987, under the $2901 000 Denton County-City
of Denton, Texas, Hospital Board Revenue Bonds, $ores 1975 and the
$280,000 Denton County-City of Denton, Texas, Hospital Board Revenue
Bonds, Series 1975-A (collectively) the "Bonds")) the remaining portion of
the HOSPITAL BOARD's indebtedness under the Bonds, if any, shall be
assumed by the CCUNTY,"
The current balance owing on the Series 1975 bonds is $2101000. Effective Memorial andtisbno longererrevenue producing,~spThus,wwe aresrequestingnthatdyou9provide
response to the following;
1. Does the City of Denton, Texas intend to abide by those obligations to
which theyy ha,,e subscribrjd as noted in Subsection 1.4 above? If so,
when and by what method should payment be expected?
2. If the City of Denton, Texas does not intend to abide by these
semi-annual'interesthpayments,~tthe nextiof whicfifty isrduet (90%) of the
January 1, 1989, the semi-annual interest payment and the next
principal payment due July 1, 1989 and all remaining interest and
principal payments due, the schedule or which is provided in the
DIRFCY LOAN NNO PURCHASE AGREEMENT, accepted the eighth day of
October, 1975?
Page 2 Mr. Lloyd Harrell
Please advise this office within ten (10) working days, please address your
response to my attention. if you have any questions regarding this issue,
please call Mr. Frank Crooks, Loan Specialist at (214)767-3910.
Sincerely,
rZt z
oh M. 0yar, .0., M.F.H.
f Ass stant Surgeon Genez~a.l
eg ona.l Health Administrator
cc; The Honorable Vic Burgess, County Judge, Denton County
1
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1
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I
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f
Novnmber 2, 1908
TM Honorable. Vic' Oklrgess
i County Judge
Denton County
110 west Hicuary
Second Floor
Denton, Texas 76201
Re j Lt7an TX-609
Direct Loan E3.~nd Purchase N180nant I 1
Flow memorial ~bspital
Denton, Texas i
Mar Judge Wrgeass
As of Decepher 4. 198% a C)N01014I5E SETTLEMENT ACRELIENT ("Agreement") was
reached IN 11-C DISTRICT COURT OF OENTON COUNTY, TEXAS between M11ON COUNTY,
TEXAS, plaintiff, versus CITY OF DENTON, FLOW t4CMORIAL HOSPITAL BOARD,
H. F. FLO14 TRU571 and )IM MATTOX, ATTOHNE:Y LI NERAL OF THE STATE OF TEXAS,
1 Uefenriants, Section III, COUNTY COVENANTS, subsection ".1 Aaoun~utir~ of Uond
Debt, of the "Acdre snent" states the followings
"Subject to tPe obligations of VI MMICAL CENTER, the COUNTY 'ihall assunso {
fj.fty percent (30%) of the HOSPITAL MARD's irxlubtedness, if any,
outstarxli.ng as of December 319 1987, under the Bonds."
I The current glance owink,rn the Series 1979 bonds is $210 000. Effective
September 16, 1988 Flow Memorial Hospital was closed to all 0 e 1
and is no longer revorkre producing. Thug, we are regiesting that you provide
reeponse to the followings
1. Does; the County of Uanton, Texas interul to abide: by thow obligations
1 above? It
wwren and they by have what mettwd should payment Subsection be expected?
so,
2. If the County of Uenton, Texas does not intend to abide by these
obligatiorv~ is it their intent to provide fifty percent (50%) of the
semi-an=):r otorest payments, the next of which is dues
Jetuory 1, 1989, the semi-annual interest payment and the ns%,A- annual
principal payment due July 1, 1989 and all remaining interest arul
principal payrndnts due, the schodule of whirh is provided in the
DIRECT LOAN BONG PURC14ASE A(REEWNT, accepted the eighth day of
October, 1975?
7
I
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A e i
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1 .
1
Page 2 - The Honorable Vic Burgess
Please advise this office within ten (10) working clays. Please address your
response to my attention. If you have any questions regarding thie issue,
pleaso call Mr. Frank Crooks, Loon Specialist at (21/4)'767-3910.
i
Sincerely
John Dyer, H.D., M.P.H.
Assistant Surgeon General
Regional; Health Administrator
cei Lloyd Harrell, City Manager /
k~
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1
r c Old (t
C1rYof DENTON, rBXAS MUNICIPAL BUILDING / DENTON, TEXAS 76101 / TELEPHONE (817) 566.8200
November 22, 1988 Office of City Attorney
i
i
Mr. Bill R. Bludworth
Mr. Bernie Duco
Wood, Lucksinger & Epstein
Attorneys at Law
Four Houston Center
1221 Lamar, Suite 1400
Houston, Texas 77010
Re: Count of Denton vs. Cit o£ Denton
a ae o. -
Cuar Bill & Bernie:
Enclosed please find a copy of a letter we received from the
Assistant Surgeon General regarding the initiation of recovery
under the Hill-Burton Act, I do not know what, if any, action we
need to take at this point; please advise.
Also enclosed are copies of a letter from one of the series 1973
bondholders, the Department of Health and Human Services acting
through Dr, John M. Dyer, and a copy of the City's response. At
this time, Flows attorney Mike Griffin, has advised us that he
will pay the January, 1989 bond payments unless another creditor
objacta. Our bankruptcy attorney, Ronald Clark, in Sherman, is
ready to proceed with the appropriate motion should we learn
otherwise. The County has agreed to split the expense of any
fees incurred thereby.
I have never heard from either of you with regard to Jim
obstetricallservices fasbFlow® fMiled to9e om 1 g wi h gthpayment for
re uirements of S.B. 1 when it ceased to rovide this rservice.
Allison has concluded that the County could not prevail on this
issue. Are your thoughts different in this regard? If we can be
of assistance) please advise. •
The City Council would like one of ou to attend the December 20,
1988 City Council meeting at 5;30 p,m, for the purpose of
updating the members on the suit, addressing the obstetrical care
issue, the Hill-Burton recovery issue, the possibility of filing
i
Bill Bludworth
Bernie Duco
November 22, 1988
Page 2
a suit in federal court on the grounds that the statute in
` question violates equal
may come up between now andtth n, They are alsor inather process
of retaining a lobbyist firm to
Indigent Health Care and TreatmedtUshActforduringmendment
then upcoming
legislative session, I believe one of
your ners is
now with Bracewell and Patterson, the firm fthe rCityt Council
intends to retain. Thus, it is an a
update. If either of you cannot attend, ppleaseiadviseiJoe Morris
of my office as soon as possible and perhaps you may be able to
attend the January meeting,
I have provided Icon Clark with copies of all UCC statements and
related security documents we filed at the County Courthouse
after the transfer of the hospital last January, Bernie, I would our Alsoeclasee yfrom October'sa billing sta ement thatilou in Austin.
run on all Austin filings, Please provide a co you had a check
does not have to order the same service, PY so that Ron
With respect to the discovery requests Allison's associate filed
in September, I believe last
City's contributions to the hoe we spitalp overdetheo 1 stli25 ye the
Should you need additional information please advise, I am
going in the hospital tomorrow and will be out of the office for
several weeks,
Sincerely,
Debra Adami Drayovitch
DAD/lh
xco Lloyd v, Harrell, City Manager
Joe D. Morris, Assistant City Attorney
Enclosures
31821
P,S, As this was being sent for revision, the City Manager
delivered another letter from Dr. Dyer, a copy of which I am
enclosing for your review and comments.
CINOV2
vnvrmber 21, 1988
fir. 5ennett Kirk
Presiuent
f 10ir ?ftiorwl ►feoical ranter, inc.
1310 Sc.r.luture Street
Uvnton, Toxos 71sxi
Rel Failure to keep and perform Cortain
covenants as relates to " "UE:IJCXi
L"OUNTYwC1TY OF 00TON, TDAS r415F'1TAL
„K~AfiO REYEN~~ ypdgs, SF:HSE9 1375"
L:)&r Mr. Kirk,
In Muth the kZNVT£S PCRTAIN14 TO PAa,A(W ANO ADOPTION CF A
WMWVIMI TF£ ►'RWZEU Isswi z (y t►thw 8Y TM CITY COUPE; ►rESnl.ufilOH
tCNTCN TEXAS, crated the 7th day a;' October 19.75 the mIN T►S UT It
TO NAS&Q CR A l?ESOLUIION UY THE rAMM end the TON.Co PERTAYMlW3
IVAS, ARTICU Vill, W • I95YONE ON COUiT G C NTdiP OIAjTY,
E' T, states:
ShWI(J the i$&Mr (ii) fa to k and
heftwWer for a perioi of JO day$ ifter written ,tany icevi, nt m ce by It
sward u9 the breach W such cownsnt the owrwvr of case
Of the :feriae 1975 uorxls, the Secretary) sha such 000"a (!r ,he
ll
04 ur,pnkll principal amount, plus accrued intalrePtetavathethereorinUthtiuatoandvahe C E)uyannle
'V'0c"ately Gy giving written notice to the Board. After the VivIN of
sucrti notice, the owners of such t>dnde ieey proceed to collect such urwaid
ama,nt in Uld imnner provided by law.
This latter constitutes such written notic* of fsllure to perform on tt*
follow" covenants: .
be
-
AATICLLr Zit 5 o wl SE T ~.n(a) Except aa.provided in
this rajoiLlian 1 SE c ~ ar voluntarily permit to toe
created dsbt, 11an, or ctarpe on the not revenues which woulo be on a
parity wit or prior to ttw lien of the bends similarly secured] ore Iioarfl
will not do or omit to do or suffer to be done or omitted to be done any
matter or thing whatsoever whereby the orlority of the lien secur
nW45 si,sllsriy secured might or dauld be lost or imWrrdl AM that it
will pay or cause to be ps.id,or will make adequate provisions for .labor,
StOriMnoa en or en er other objects wAlCh it unpoid Might by law be given
the P
bensfit recedence tof tree 4USltty, with such Lien orestso and established for
s swistly, sedurb, Provided, however, that
not►ung in this Section shell require the 864ft to
provisions for any such lien cly aY$ disohersr or mskd
validity thereof shall be n y y dl+~ or so long as tr,e
Y gonci 1ritPt contestep.
y~
1
{
Pegs 2 - Mr, Ssnnt►tt Kitk
l
01I Of the n~ as the &osrd of the Flow
f to l amt ttaair meet ~ r►~•NW fort the
dievotw
the her
of the l1m could be last arIWtOY A situation now exists wherein th rp iority
Further, as of Sapt+,ber Ids 1--881 with ttn
ability to generate :*MMM eeaseu any of the hoapItaly the
=TUN J#U6. This provision statls~~~ oonstltutirp a vlalatlon Of
~ TM .iaauar wlll dug
r every terry cow&* and p mitionY d rw am perfans each and
punctually Perform aiiedition 4&W in this reaalutian
lt*qjlrW State of T*I
by the Qonstitutlon and !a" o}fthe
sufficlant ahem ftlresa Usual " 1 W 41"t soon rNreotNpu and
patrons and Wt 4" as rill be lull 0 by the K"pital Syat" to all
tM of this resolutions y iant tc Met all the
t0i' the use of the 3 it is
f « Yates will be W~t 4
t e
nd to eaintain the FundiO0lUlt~beIt ~rtsxsat
asinti Isla VX
In adaltlon MMU vi
~r+quiree tfi
each to be deowtod (bj rsquirsa tM tib,, with the tto 4Wbb1*v as tYW~ M; WwW* +Wra~clk" cd NOAM the establietannt of thhee *MOM ~ s
Sosaifloally► SmrZON d.0 requires the astabustont r1►a tht+a Latal a whsn fully f~0 $41 auk N"Atww" of fW4 to be depoaiateo
J ralntAI with the depository Wfto as trustee.
SCM4" 6•Us the estawlsternt uid
u yd ~ he total SO of whtah awn fyl yx~hr+ded t0~$V""d
ainad with the dapoaitsey bsp# as trustee. j2SO such
Those fw a t'eq+tired by =mows s d,03
aeaint the rvustae and s.OSt as nat+d abew+ are to be
ar' ; tam$ is the WZ P*
tww~ of MM as Natist SAMO M" the m
twWs ~ i9 the Trustse aft* in ,~M ~ NeitM►r of
wets
to ild that they maerw ;t~j owl" [WO
~
ftb*f To" NW a OAw" of $01,60006 ed it tM
,vokah
C41401100 490 an Ssptam*" ld► Lout flow ggtaat
n modal an ~ri~ws on the sass day WW sn r cort Claw 22 f 9 befell ftvw f~ to puf+ft U4,44 ~tei l this "Mtitwtea MU" O
A Ise," of thee cams idi& i y" rili ed toot * am.
of fterw aaoount~ ~n a W* 4w 0" the Trustee w*
of
f
i
j page 3 - M`. Sennett Kirk
if you have any 4ueatiarn VOOVdinG this latter, or iaaws relatad, please
contact fir. EMItt Roberts, Eaq., Office at GRUXal Gxnal at 214/787-3465 or
Mr. Frank Crooks, Regional Loan spaoialist at 214ndiomo,
Sincerely,
Jft Ms.
Assistant5ur~yeMo.~D. M.P.H.
j ROQionel HMa1th Md*WOinerml
strator
cc l Mark Levine, WL
zit tf! Roberts, OGO
y of Denton, Taxa$
nty of Osnton, Yexa
Jamm P. Allison, AttWtney far rw*m Ox ty
I
I
Is%
Novolbsr 17, 19oe
Mrs Mal" as Linton
Administrator
Flow nional Msdioal Canter
1316 Scripture street
Denton, Texas 76261
Dear Mr. Linton$
M Ssptsmber 19 we ware advised that the Board of Directors, blow fbgional
Medical Center, daeiwa to close the hospital effective September 16, 19880
Flow fi
Floi egional Medloal Center, formerly Flow Manorial Hospital wars awarded
grant assistance under authority of Title Y,i of the Public Health
Service Act (Hillo-ourton) as foliows:
r
REt o e pa t
1) Tax 17039 246,371
Septsaber 7
2) Tax 0163 ,371
411,300 march 4 i DO
3) Tax ONO ) Tex M609 $10050,000 September 30 1967
A
407,410 Novaoaber 10 b976.
In applying for Federal D~ t aasistsnce,,hospital officials gave certain
assuranaea to the T*X" tment of Health and to the Secretary, one of the
assuranc»s pertained to the control )M we of the facility for twenty years
following the completion of oonetruotion, The last of the four grants
provided assistance for a ma* sxxtemintion of the hospital. This pmjeot
was completed (opernd for patients) on Noysomr 1 1976. The assurance
orqunt~ tthatttthe facility be hospital for twrn~y ymare following that date, 31
period three earlier grants had been "Usfiadot eligible use and Control for the
The closing of the hospital on September 16 is contrary to the assurance and
causes the D4Wtasnt to initiate a rsoovery of Federal funds, The re0o ery
pertains only to the last grant for pro sat Tex H609, In accordance with
Section 609 of the Act and the ixplemeting regulation: 42 G", Subpart H, wo
have calculated a preliminary recovIery amount of $243pS90s A copy of the
Calculation and a copy of the regulations are enclosed.
The regulations authorize the Secretary to waive the recovery for Boots eause
should either of the following apply (tea section 124.708))
"(a) The facility will bo devoted by the applicant or other owner to use
for anther public or ran-profit purpose which will pronote the
Purpose of the Acts
J
P196 2 « Mr• Charles B. Linton
(b) Thera ere re"Onabi'r assurances that for the rwWndor
06"4r period Other AdxLk ^'0 *s not of they
utltized fOr the Wrpoto h the facilit ractylittu not areviously
be yo utlllzed +a~tl aresu~sot ylenE In na~t wed will
purpose. "
If the closim is Only t OwPOrgry ~ithdrAw the rft*V*ry dWMW Qm 89th the Asper reopener the pepW*Wt May
by the refer Of days that the hwepital periW of exigible use end ~rl
ar transferred to an s11 wes '10"d# Tr the hospital is sold
which Ask"* the oalanci e~ 2 a olio or non profit n
D*WtmMt nMy wlthdrar the scoviry I e, and the heap al~oWatoh ta
use end control. =`1 doltld and ext4" the psrlod of eligible
Should the facility be transferred to a proprietary orpenizet,lon,
D"rtaw* say rGOW►sidsr the r cowry awrount based on this t the
plot" notif UM value#
receive a y sY Office if any of theaa Oinkmtan~s apply. If 0 d6 not
r
doun 'ec*' lna t~ within 60 days of the data Of this I*tter, ra wtli "nal ry eebcnt and deprah ~wdtata pays~t
Sa +"Yo0u he~As1 .qu~+atta or atQuira claririoatlon I1
'r Vid" at 214/767.3910• 1 h~laaaa eontabt Phillip
sirrcarily~
ZetmMODYSTO m,00
Reciew 3ur4ao►► lienaral
noloauras Naelth Aft"Stratar
001 Courity Of Dentm Tom"
aity of LAM. fox
Mika mriffin
NOV
CITY OF ? "CM
LEGAL DEPT.
Index (Reproduction Cost) Method
Based on Building Cost Index (BCI) & Consumer Price Index (CPT)
Flow Memorial Hospital
Denton, Texas
ID Number: 480093
Project Number: Tex M609
a, Opening Date; November 1 1976
b. Than Date; September 16, 1988
Plumber c' Months between a and b: 142 months
c, 8CI as of Opening Date: 1479
d. BCI as of Then Date: 2612
e, CPT as of Opening Date: 38
-1 P. CPI as of Then Date: 11918
9. Total Project Costs $1,137,389
1) Building _
2) Addition
3) Renovation $8830947
4) Fixed Equipment 30,311
3) Major Movable Equipment 201,131
h. Participating costs: $1,039,814
i, Original Grant Amount: $ 407,410
,j, Total Project Equipment Costs; . $ 2319442
k. Remaining Useful Depreciable life (months):
3) Renovation: 98 mos.
4) Fixed Equipment: 98 mos.
3) Major Movable Equipment: 2 mos.
1. Proportion of Project Participation: (h/g) 91.42% '
M. GovernmentIa Share: (i/h) 39.18%
n. Construction Costs: (g-,j) $8850947
o. Cost Increase rector (Bid g, 4 Fixed Equip,): (d/c) 1.7661
P, Cost Increase Factor (Equip.); We) 2.0635
q. Appreciated Bldg. Replacement Cost: (oxg)
3) Renovation $1,364,671
r. Appreciated Equip, Replacement Cost:
4) Fixed Equipment: (oxg) $ 88,834
5) Major Movable Equipment: (pxq) $ 413,436
s, Remain ng Depreciation Percentages
3) Renovation (k/240) 40,83%
4) Fixed Equipment (k/240) 40.83%
3) Major Movable Equipment (k/144) 1,39%
t. Depreciated Replacement Value:
3) Renovation: (qxs) $638,833
4) Fixed Equipments (rxa) $ 36,279
3) Major Movable Equipment: (rxs) $ 51773
u, Then Value of Projects
3) Renovation: (txl) $384,041
4) Fixed Equipment: (txl) . 33,166
3) Major Movable Equipments (txl) $ 3,280
v, Recovery Amount
3) Renovation: (uxm) $228,827
4) Fixed Equipmanti (uxm) $ 12,994
3) Major Movable Equipment: (uxm) $ 21069
Total Recovery Amount $243,890
DEPARTMENT OF HEALTH & HUMAN SERVICES
Publlc Health Service
Regfpnal Oiflo VI
D 1200 Mein TOW0 9WWI%
0~1 Dallas, Texas 152o2
s-
NOV NOVember 2, 1988,
•
Mr. Lloyd Harrell
City Manager Mn
City of Denton
Municipal Building
213 fast McKinney
Denton, Texas 76201
Pet Loan TX-609
Direct Loan Bond Purchase Agreement
Flow McWriai Hospital
Denton, Texas
Dear Mr.`Harrellt
As of December 40 1997 a COMMOpa E
reached IN THE DISTRICT CHAT W'MNTOM yM ANT "Agreement") was
TEXAS, Plaintiff, versus CITY W DENTON ' TEXAS between De HTOM COUNTY
H. to FLOW TRUST and JIM PATTCX ArTO~' y OW KNOR L HOSPITAL BOND, '
Defendants. S"hon 1 CITY MMW OF THE STATE OF TEXAS,:
Dolt of the "Agreaen;" states the fc1i us" t 1.4 wMy1 an of Horn to
"Woot to the obligations of the MEDICAL CarTVTER
fift~ percent (SON) of the HOSPITAL , the CITY cheli assume
outs ending as of Oeoembsr 310 1987, ethhe $Z we it a ,
of Denton Texas Hospital Board Revw~w gp~e # OOO benton County.City
:280,=00 bu►ton , sera 1975 and the
Bonds Sertss 197D•A Y-City of oenton, Texas, ►bspitai Boxed aeverxte
the H~SPITAL eOAAOIe inddeebbtedlase the the loldsm)i tie remainir~o portion of
assured by the CWNTY.N , SmY, shell be
Tht CUrr"t boUmos owing an the Series 1979 bonds Is $210OWs Effectivs
nPteatYber lit
and 19x8 Flow I~Wfial Hospital, wee Oland to al.L new O*issions
a is no Ul"r rev"* Produoing. Thus we a
response to the followiNS ' re requesting that you Prcvde
10 Does the Clty Of Denton, Texas intend to abide by those obligations to
which t hew eubeoribed as noted in Subsection 1.4 above? It 800
and~f°y whet method should Payriwtt be expected?
When 2. If the City of Cantons Texas does not Intend to abide the"
obligations, IS it their intent to provide fifty by
$010&"Al interest paylaent Pera t (X1%) Of the
January, i 198l the eeetls, the next Of which is due
PriHOi~lli, ,
due ~yy` 1 Interest peyw t and the next
p~lool duethei'eohe Is 040 i i~de~d"irstttfti
October, 19 Pl14CHi~t AOWDCN?, a00epted the eighth day of
a
Page 2 - Mro Lloyd Harrell
Please advise this office within ten (10) working days. Please address your
response to my attention. If you have any questIona regardilitKis Issue,
please call Mr. Franc Crooks, Loan Specialist at (214)767.3920,
jO rely,
tan~Su~ Ost M,PsH,
nal Heal Adnimiisstrator
o: The Honorable Vic Burgess, county Judge, Denton county
ECEIVE
Nov 8 X988
CITY OF DENTON
LEGAL DEPT,
C1rV 010ffNTON, rNX48 MUNICIPAL SUILD/N0 / DEN70N, 7EXAS 78201 / rELEPNONE (817) 680•8307
office of the City Mandoor
November 11, 1988
John M. Dyer, M.D,, M.P.H.
Assistant Surgeon General
Regional Health Administrator
Department of Health & Human Services
Regional Office VI
1200 Main Tower Building
Dallaa, Texas 75202
Res Loan TX-609
Direst Loan Bond Purchase Agreement
Flow Memorial Hospital
Denton, Texas
Dear Dr, Dyers
I have referred your letter of November 1, 1988 to our attorneys
for review, As I at sure you may be aware, the Flow Regional
Mudical Center has filed bankruptcy proceedings, in which the
Department of Health & Human Services is listed as a secured
creditor. You may wish to file a claim in such proceedings. We
are advised by Flow's attorney that there are sufficient assets
available to satisfy all of the hospital's outstanding debts.
The City s course of action with respect to the Compromise
Settlement Agreement mentioned in your letter will obviously be
influenced by the progression of the bankruptcy proceedings, We
will keep you informed of any decision we make with regard to
payment, although I understand that almost two months remain
before a payment becomes due,
Very my yours,
L oyd V, Harrel
City Manager
LVH: j a
31521
i
f
It OCT - 61980
I.f ~7 J0
r1 G'r&iuri
cnrM~r~nc:ers n,rr.
CITY of DENTON, TEXAS MUNICIPAL BUILDING / DENTON, TEXAS76201 / TELEPHONE (817) 5668200
MEMORANDUM
DATE: September 30, 1988
TO: R. E. Nelson, Executive Director of Utilities
FROM: John F, McGrane, Executive Director of Finance
SUBJECT: FLOW MEMORIAL HOSPITAL
t
In response to your memorandum dated September 20, 1988, please
be advised that all bankruptcies in which the City of Denton is
involved go through the City of Denton City Attorney's Office.
We have boon In contact with the City Attorney's office during
the discussion of the Flow bankruptcy filing, At such time as
it is deemed necessary by the City Attorney's Office, the City
will submit the proper claims to the bankruptcy court, As you
are aware, not only is the $226,000 that was deferred an issue,
but also the utility bill from the date prior to the filing that
Is delinquont and any post petition filing.
If you have any questions regarding this matter, please advise,
r
J (H111 c rane
JFMCG:af
S~IC►JiYM~'►~*
cc!
i3rnie I'ullos, Director o£ 6 ectric Utilities
Ann Bingman, Customer Service Manager
Debra Drayovitch, City Attorney
File
3870E
DEPARTMENT OF HEALTH & HUMAN SERVICES /{4}~
Public Henlth Service
rrrN
Regional Office yi
1200 Main Tower Building
Oallas, Texas 76202
August 19, 1988
Mr, Charles B. Linton
Administrator
Flow Regional Medical Center
1310 Scripture Street
Denton, Texas 76201
Ras Request for Release of Lien
Dear Mr, Linton; Loan # TX-609, $2900000
In order to facilitate the request for Release of Lien which your hospital
initiated, recently, we are asking for your assistance in obtaining additional
assurances on security fcr this loan,
First, in exchange for the release of the first lien on net accounts
receivable which we now hold, we are asking
from both the City of Denton, and the County you
l
DentonaCounty,e7exad, sucht
etters stating that it is the intent of each entity to assure the fulfillment
of the
of HospitaliDebt, asacontainedi in the accordance Compromise SettleemmentnAgreemen datedn
December 4, 1997.
Secondly, a statement from the Hospital granting a second, or junior lien on
accounts receivable in favor of the Department of Health and Human Services.
To facilitate this statement of release, please have your attorney
agreement granting this lien in partial exchange for the release of the develop
lien on the accounts receivable, such agreement to be signed by the Chairman
of the Board of Trupwes of the Flow Regional Medical Center and notarized.
If you have any questions regarding this issue, please call Mr. Franc Crooke,
Region U1 Loan Specialist at (214)767.3910.
Sincerely,
Mar L. Boyfkr
Director
Division of Health Resources Develaiment
r~1 u1..• 4 N .dr ~s~~~~Yi /1}~ly~ . 7~'N~ V
- 4T111 11
I
Ciry of D&NrON, r&XA8 MUNICIPAL BUILDING / DENTON, TEXAS 78201 ! TE
LEPHONE (817) 566.8309
OtNce of the Mayor
M1iMORAN1)UM
TO: Members of the City Council and City Manager
FROM, Ray Stephens, Mayor
DATE; September 2
1988
SUBJECI,: Plow Hospital Meeting
Sennett Kirk has Invited us to a meeting of the Flow Hospital
Board. Of which Sennett
is Chairman, and Baylor }fospital
officials on Tuesday, September 6, 1966 at 2;30 p,m, in the
Green Room of the First State Bank,
ti .Ray Stee iions, Mayor
D
LNOV 2 219%
011Y MA CERS0 i
vawemtx:r 21, lhhe
I
mr. Sennett K1i*
Presiuent
rlotr AFUJOnul lsenicol ^rrster, ;rec.
13LC 5criptur° 'treat
iiGlltOn, TnX% , 'O1
ae! Failure to keep am perform Curt-jin
covenants as relates to tho 4LV1TUi4
CtXWY..(;ITY W OLNTON, TUAS 0.1!, ITA.
%A10 ALMUE Woo SUIE'S 1)75" j
i
Aar far. Kirke
In Wth tre MINUTES PERTAIN14 TO PASSME AND ADOPTION OF A kessUXUTIUrr
APM(V1M3 TF£ W(PiSED 1S'.SUArrrj OF 0OWS BY ThC CITY COUNCIL OF DIE: uITY UF
XNT'ON, TEXAS, dated the 7th day of October, 1975, and the MIEUTES PCKTAItil"I
TO PASSAGE OF A REUXUTICN UY THE W*iMIS$jrtOS' COURT l1F UENTON ;.WNTY,
' %XAS0 ARTICLE: VIII, GEICRAL f%VLSIM# S& ION„0OA, dtatest
I
Snoulu the issuer (11) fail to keep and perform any covenant made uy it j
r raruunder for a period of 90 nays after written notice is given to the
board of the Drench of swn covenant, the owner of sucn bom7s (in the C41 $a
'
of the Srrius 1975 uonds, the secretary) snail have t►er right to dsclara
teie unpAld Principal amount, plus accrued interest the Tenn rAw anu payaole ~
irworlately oy )wing mitten notice to the Efoards After the giving of
soon notice, the owners of such OWS May proceed to collect such unpaid f
amount in the harmer provided by laws J
This totter constitutes such written notice of failure to perfope an the I
followinj covenants= f
i
ARTICLE III SUZA, NAN 9 SECTION!s~?~
this resolution w ~ I not create oto -or voluntarily a as provided in J
pr+mic to no
created any debt, lien, or &Arge on ttwl riot revenues which would be on a 1
parity with or prior to the lien of the bonds similarly securer; the aided
will not do or ofait to do or suffer to W done or omitted to oe done any
scatter or thing whatsoever wcaroby the priority of the lien securing tree
nonds similarly secured might or could be lost or impaairadi sna that it
will pay or emu" to be paid or will make adequate provisiors for labor,
Materials, supplies or other aujacts which it unpaid might Oy law be given
pracmence to or an o4 wllty ritn such Lien *rooted sod rstablishou for !
0o benefit of the bonds similarly secured, provided, however, that J
nothing in this Secti m shall require the Board to pay, Sischarye, Or msxe
provisiurss for any such lien, charge, claim or amend to long as tfo
validity thereof shall an oy it in vow faith contested.
Pool 2 + Mr. SwWwtt Kirk
c1o ~s the Ord of Uw Flow topipyl Medical
01rectsd the the halo W.1 at their l.~MtarO Leo the
°f the 11en could be Lost 0~ptcywetasit to,Sapttw *X t6o 19gb t~ further
Upa,~ra0. now exists where.indinetathe tsrciiartty
Further, ae of 3aptafter 16
ebilis "968 r wlth the Closure Of the h0
SECTION
y to 3,06, This ~m ceased, thereby owatituti apltal, the
provision statesr nSl a viaiation of
~ The Issuer will duly and punttualiy
*Vevery term, covenant end condition ' dhserve this parlays
WrnctwllY pertOrwt all duties r contained in this resolution ~ am
State of Texas, and the erla►t ~ ~ t~tution erne Iaws of the
~sufficient Cho' issuer w1Lt
t'&qee► tot 46rvioes 04VUW such ntso to all
and wtlanta as well be fully ~ pit al SYteM to ail
Of this r*wlutian. Fat all the
that Me$ for the use of the Systtia q
tisw**~y eked and
Pay for all Operating,
to
ON~s. W4 to ft intatn~ 'e' r" t~loieht ta +~'iltWitl* VI
_of this resolution, the CMted and establised shnd t VI
SfCTZON Ytht u
±
I
a
sup~o~ to bttt !w~s~ ' futtt 6wh with the st,bwatian (tl) req
thO e tst*U$hWR oft ~ tat; end
MQUIM ulr:s th
stabFlishn>ant of the "FAIR AND MADO
ifIft"Y, SECTION 6.03 rs"J" the alt WLACF~
1040M Fun6 and natrrt aw th fully hob $4,~ ~ ~ ttwmnft or a
t~ bsrnk, at Trwttt. w deposited
S
ECTION 6003 squirts the estawll
ROW
funa be ta"sarnt Punt, the total aMaa "leeft t ~fta~ae of a Aswr aV
netnt+~intd with the domof *kl4h it~, w* 0 as YTrusO to be rum
Those Ifthfft"red by ~
w M3*vof is to byan y8 6403 aIW 6.01 yy
thesi s ~s To" Is the pink of rum t• ~°"sl a Neil be
# the M
rMre her atM the W in the Trustse Bank Truttto maL ►r ve of
+ Nato, 04da lsb wr of ed that t lase a ~,A
Virus
Pilot ant ON* Nlla! L"ta1sd ttha the he rsauw race
malAtairw
a alas had a tw avo of fi3o6N
3 at ells
tt, an 3eDterbts SI
mss" Pmratl ' thjM0 e saw
P1a~ Atpianel Msdtttat Csertsr aloted
an os+der tar rsuk venues an the dty
end
an ofct to ux*,r UA c. Chtpttr 1; WW OR ~ 22, Is" antsrsd
fl t++sr,
Act"* 188LOd Of th ajrn wt this. CafiitAtmtes notice! of
tU$ sod seas
fuVinq of rntr" eCC tl* "M Utthbt= ti 4604 As ,
the
C~M1t! it t bw* ether th f} the ms t« aw
* ofir&ft Nee
rttalt.
Ui'rA... ylIl
l
i
a
Page 3 • Nr. Sennett Kirk
If you have any questions reordino this letter, or issues related, Please
contact Mr. EmKitt Roberts, Esq•, Office Of General Counsel at 214/767-.UA3 or
Mr. Frank Crooks, Reoionel Wan Specialist at 214/767.3410.
Sincerely,
} John M. Dyer, M.D., N.P.H.
Assistant Surgeon General
Asolonal Health Administrator
cot Mark Levine, WL
Emitt Roberts, OGO
City of Denton, Tom ~
County of Denton, Tex"
Jwm P. Allison, Attarnsy for Denton County
14
pI
M
J U,/
IN THE UNITED,STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT'OF TEXAS
SHERMAN DIVISION
IN RE:
S$
FLOW REGIONAL MEDICAL CENTER, INC., a Texas nonprofit corporation,
9
a/k/a FLOW MEMORIAL HOSPITAL Case No,
(Chapter
Debtor
VOLUNTARY PETITION
1Petitioner's mailing address is 1310 Scripture, Denton, i
(Denton County), Texas 76201,
2• Petitioner is qualified to file this petition and is
entitled to the benefits of title 11, United States Code, as a
voluntary dabtor.
3. Petitioner intends to file a plan pursuant to Chapter 11
of title 11, United States Code.
4. Exhibit "A" is attached to and made a part of this
petition,
WHEREFORE, Petitioner prays for relief in accordance with
Chapter 11 of title 110 United States Code,
FLOW REGIONAL MEDICAL CENTER, INC, '
a Texas nonprofit corporation, a/k/a
FLOW MEMORIAL HOSPITAL
Bye
ar n on, a xecut ve
Offioel
VOLUNTARY PETITION) page 1
L~
f+
A
PHILIPS 6 HOPKINS, P.C.
101 N. Elm
Denton, Texas 76201
(817) 566-7010
By' ~L
Miller Davidge
Byl i...t.(r
Mike GrifFin
ATTORNEYS FOR THE DEBTOR
DECLARATION
RegionalCMedicalLCenter, CInc., E a ~T xas e noOfficer nprofit ocorporation,
a/k/a Flow Memorial Hospital, declare under penalty of perjury
that the foregoing is true and correct and that the filing of
the petition on behalf of the nonprofit corporation has been
authorized.
kl~ Charles Lin o
Executed on. 1988
i
r,
,I
OFFICIAL DANNAUPTCY FONMS. REVISED 1903 IHE ODES COMPANY . Po BOX 29929. DALLAS, TEXAS W38
United, States Bankruptcy Coup rthe Eastern Texas
to re Distrlcl of
FLOW REGIONAL MEDICAL CENTER, INC., a
Texas nonprofit corporation, a/k/a
FLOW MEMORIAL HOSPITAL Case No.
Oeblor fsel lorlh here 011 names inCludmg bade names used by Debtor within has! px ear I w
SaoJISFtuINy N9 andwtI919finp1dy9l f r3.Wyn69raIIm1N0 123254-0
ExH
(II peblloner 19 a corporation, this 150ftl "A" shall be blar ari GAtached 10 the petllton pursuanl to paragraph b Ihersol l
FOR COURT USE ONLY
0313 P011100 ked _
Cast Numbv
I. Petitioner's employer [den tlficatlon number Is 75-2123254-0
2. If any of petitioner's securities are registered under secllon 12 of the Securities and Exchange Act of 1934, SEC file
^Ilmber Is not applicable
3. The following financial data ,er Is the 24 latest available Information and refers to petitioner's condition on
aeE.~ 1988
a, Total assets: $
b. Total llabllllles: $ _L1115 5 Q~y 5 0
Secured debt, excluding that listed below ApPAOAlA2AfENUMBEn OF
NOLUAS
$
Debt securities held by more than 100 holders $ "0
Secured
Unsecured $ -n- -o
Other tiabilflles, exciudtng contingent or unflquidated claims $
n- * g _
Number of shares of common stock $ n/a
Comments, If any: n/a
4. Brief description of petitioner's business: Hospital
6. (if presently available, supply the following Information,) The name of any person who directly or Indirectly owns,
controls, or holds, with power to vole, 20% or more of the voting securities of petitioner Is
_not annt{aab7e
(It presently available, supply the following Information,) The names of all corporations 20% or more of the out-
standing voting securities of which are directly or Indirectly owned, controlled, or held, with power to vote, by
petitioner are
pQlioab3y~
*Currently not available. Will be filed with Schedules & Statement of Affairs.
WitII'A". tM Odle O9M01Ay 061106
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
IN REt
FLOW REGIONAL MEDICAL CENTER, INC. § C
a Texas nonprofit corporation, ass No,
a/k/a FLOW MEMORIAL HOSPITAL 5
§ (Chapter ii)
Tax I.D. #75-2123254-0
)
Debtor S
DISCLOSURE OF COMPENSATION UNDER 11 U,S .C.
SEC. 329 AND BANKRUPTCY RU LS LSS 01F(b}
I certify that I am the attorney for the above named Debtor
and that the compensation paid or agreed to be paid to me for
services rendered or to be rendered on behalf of the Debtor
and/or in connection with the case under Title 11 of the United
States Code, such payment or agreement having been made after one t
(1) Year before the date of the filing of the petition, is as
foliowei
1.
Prior to the filing of the petition initiating this case, the
undersigned received 90me $40,000.00 from FLOW REGIONAL
CENTER, INC, a/k/a PLOW MEMORIAL
HO, t MEDICAL
vices rendered or to be rendered inSPITAL
contemplarioi~bo~rorfin con-
undersign dhandithe Debtorhisathee sums of rr 0,00ent between the
per hour, whichever is the greatest of the woo. 0.00 or $150.00
11.
person,
I have not agreed to share this compensation with any other
rrr.
The undersigned has not received or agreed to receive any ,
compensation in connection with this case except as set forth
above in this statement.
DATEN September 22, 1988.
L
i
1
14 Awk 8 a 0,210 0
CORPORATE RESOLUTION
"LOW-. IONAL MEDICAL CENTER
INC,
I, ALFRED F~ HURLEY,
FLOW REGIONAL M L Searetary of th and of
bICAL CENTER e Bo
following is a resolution dui INC „ do hereb Trustees of
y certify that the
at a special meeting held on Frl~apted by the Board
office of the corporation at FLOW yl September 16, 1988, attthe
1310 Scripture, Benton, Texas 76201, MEDICAL CENTER
is as followa~ 6242, at 6130 a.m. The resolution RES
tha and ChiefT E ecu tLVED ive Officerarofs FILOWton, Administrator
CENTER, INC, be and is hereb REGIONAL MEDICAL
law firm of PHILIPS AND HOPKINSuthp C toto cause the
file a Voluntary petition in Bankruptcy in pthea United
States Bankruptcy Court Cor the Eastern District of
Texas, Sherman Division, as soon as possible,
BE IT FURTHER RESOLVED that they are hereby
directed to file said Voluntary
11 of the United States Bankruptcy Code, to efilehasuch
other papers, schedules and documents as May be required
pursuant to the U,S, Bankruptcy Code,
I certify that the above and foregoing is a true and correct meeti daterand at thehtime above written Board of 'trustees held on
the
DATED, September 21, 1988,
NAfFR sec et
card of Trust eaary
5
f
FLOW REGIONAL MEDICAL CENTER, INC „
A Texas Nonprofit Corpoegfi~gb j
a/k a FLOW MEMORIAL f103PITpL ~ I,r ~i;{
LIST OF SECURED CREDITOR$
(AS OF SEPTEMBER 22 1988)
CREDITOR
AMOUNT OWED
1. Sovoran Leasing Corporation
Three Gateway Center $412,130,95
Suite 300
Pittsburg, PA 15222
2. Lino Financial Services, Inc,
f/k/a Lease Investment Corp, $369,822.96
P. 0. Box 75570
Chicago, IL 60675
3. Bank of Lincolnwood
4433 W. Touhy Ave, $244,902.29
Lincolnwood, IL 60646
4, Department of Health & Human Services
(HHS Board) 5210,000.00
Bond Payment Dept,
P. 0. Box 3668
Dallas, Tx. 75285
5, Charter Financial
One Rockerfeller Plaza $186,565,16
N,Y,, N.Y. 10020
6. MBANK Denton
215 W. Hickory $120,000,00
Denton, Tx, 76201
7. First State Bank-Denton
P. 0, Box 100 c 52,090,62
101 S. Locust
Denton, Tx. 76202
FLO14 REGIONAL MEDICAL CENTER., INC,,
A Texas Nonprofit Corpo-ation,
aL a FLOb1 MEMORIAL HOS ITTA
LIST OF TWFNTY LARGEST UNSECURED CREDITORS
J
(AS OF SEPTEMBER 220 1988)
CREDITOR
AMOUNT OWED
1. Morrison Food Service, Inc.
Department CF $126,075.28
P.O, BOX 102289
Atlanta, Georgia 30368
2, Medical Laboratories
Box 1867 106,966.27
Denton, Texas 76201
3, Denton Regional Medical Center
P. 0. Box 910324 60,990,03
Dallas, Texas 75391
4• General Telephone Company
P. 0. Box 220041 47,804.97
Dallaa, Texas 75392
5, city of Denton Utilitiej
P, 0. Box 2347 47,094,51
Denton, Texas 76202
6. National Emergency Services
P 0. Box 156 470056,75
Tiburon, California 94920
7. Uospital Nanagement Prof.
155 Franklin load 36,792,81
Suite 401
Brentwood, Tennessee 37027
8, Blue Croas/Blue Shield
Provider Reimbursement Div, 33,641.00
P. 0, Box 85880
Dallas, Texas 75285
9, Owens & Minor, Inc. ,
P. 0. Box 815639 26,093.62
Farmers Branch, Texas 75381
10. Serviosmaster Company, L.P.
West Central., 4255 LBJ at Midway 23,$65,00
Suite 234
Dallas, Texas 75244-5877
r
LIST OF TWENTY UNSECURED CREDITORS
Page two
CREDITOR AMOUNT OWED
11. Bergen Brunswig Corporation $230619.55
P. 0. Box 115028
Carrollton, Texas 75011
12. Angelica Healthcare Services 21,761.62
3917 Morse, Suite 220
Denton, Texas 76201
13. Angel Touch Nursing Services 21,272.79
P. 0. Box 292994
Lewisville, Texas 75067-2994
* 14. Aetna Life Insurance 20,870.51
Employee Benefit Division
P, 0, Box 396
Hartford, Connecticut 06101
* Employee Pension Fund
R
15. Health Advantage, Inc, 18,090.00
155 Franklin Road, Suite 401
Brentwood, Tennessee 37027
16. I.H.C. Affiliated Services, Inc, 171385.25
2200 Beneficial Life Tower
36 South State Screet
Salt Lake City, Utah 84111
17. Hedtronics Its, 16,512.17
P. 0. Box 51036
Dallas, Texas 75265
1.8. Healthcare TV & Tele. 16,293.78
P. 0, Box 100638
Atlanta, Georgia 30384
19. United Medical Supply, Inc. 14,557.33
P. 0. Box 84748
Dallas, Texas 75284
20. UARCO 14,196.87
P. 0. Box 4975
Chicago, Illinois 60689
,F
Status Of Flow Hospital 1310 Scripture
01 000002420308201 03 FLOW REGIONAL MEDICAL 01310 SCRIPTURE
02 000002420392201
03 0000OIA90403401 01716 SCRIPTURE
04 000004020450201
05 000004070945201
06 000004100339201
01 000004120199101 06
Ylast payment recieved L-,3/- f for 'j/~!NL= Billings.
Current Bills Due
30 Days Arrears 1411i-zlp~jf 5Llj JJpj'~
60 Days Arrears
90 Days Arrears
Total Due of which over 30 days delinquent,
;a
CITV ofDENTON, TEXAS MUNICIPAL BUILDING / DENTON, TEXAS 76201 / TELEPHONE (817) 566-8200
MEMORANDUM n~ I
UATE: September 2U, 1988
TU; JOHN MOGRANE, EXECUTIVE DIRECTOR OF FINANCE
FROM: R. E, Nelson, Executive Director of Utilities
RE: Flow Memorial hospital
YY.ryrY.r...OMY......YY.i.Y.Y..Y.........N..Y.Y.,YY.xYr.YY...rrY.Y
According to the attached release regarding Flow Hospital, they are
expected to file a Chapter 11 bankruptcy this week, Please make sure that
Denton's bill i.s computed and submitted as a claim in this proceeding
including the amount of $226,000 which was deferred to October 1990.
Nelson, 7E,
Executive birector of Utilities
gcr
cc: Lloyd Harrell, City Manager
Ernie Tullos, Director o+ Electric Utilities
Ann 6ingmen, Customer Service Manager
file
g()"j rp z31988
6008U:27 1,Fi,C Ulfr,,f.
.Bulletins
J V 410 not filed It yet but antfcipele doing so trespass or harass patients at
CIS' i „ tmlesa we change our mints," he said, abort~lon clllilcs,
'f1he City Council voted 12.8 Monday for a
Mow to file Chapter 3 3 NATION tl1"Oure Bch "M the city attorney's office
Flow Memorial Hoe IW is to Ae to seek court inJutktlone against leaders of
:11 hapter 1 t bankruptcy this week t~ed w UI3, Atlanta to fine protesters Meet on due' the group that orgaww the
nkft4Aosaid iaTyler,Flowattorney
Mike Griffin n said this Mlania(AP) - CitY officiala,exas rated '1?1emeaeuredonnotinterfere%Iththeright
morning
;e Thal IsProba*therouts wlLgo,we AhOst SnU-abortion ~ fine ta uo~ toWcketamtofree epeech,eoumnmembers
protest Bald.
i 4
n'
DEPARTMENT OF HEALTH & HUMAN SERVICES rubllc flealth SarWce
'ffffl° Regional Offlce VI
1200 Main Tower Building
Dallas, Texas 76202
August 19, 1988
Mr. Charles B. Linton
Administrator
Flow Regional Medical Center
1310 Scripture Street
Denton, Texas 76201
Re: Request for Release of Lion
Dear Mr. Linton; Loan # TX-609, $2900000
In order to facilitate the request for Release of Lien which your hospital
initiated,recently, we are asking for your assistance in obtaining additional
assurances on security for this loan.
First, in exchange for the release of the first lien on net accounts
receivable which we now hold, we are asking you to obtain letters of intent
from both the City of Denton, and the County of Denton County, Texas, such
letters stating that it is the intent of each entity to assure the fulfillment
of the hospital's loan obligation in accordance with Section 1,4, Assumption
of Hospital Debt, as contained in the Compromise Settlement Agreement dated
December 4, 1987.
Secondly, a statement from the Hospital granting a second, or junior Lien on
accounts receivable in favor of the Department of Health and Human Services.
To facilitate this statement of release, please have your attorney develop an
agreement granting this lien in partial exchange for the release of the first
lien on the accounts receivable, such a"rsement to be signed by the chairman
of the Board of Trustees of the Flow Regional Medical Center and notarized.
If you have any questions rogarding this issue, please call Mr. Franc Crooke,
Region VI Loan Specialist at (214)7674910,
Sincerely,
1 Ma-, BoyArr
Director
Division of Health Resources Development
K
i
c
yr, y •r+:
1` 1 it S , I ` 1 ? / .r~1A ~1c I.i . . t[ 1 T`
1 l 1 111 'yytt
,.MVawrM /IYi •..M.... u, ,~t .n .f •fCG ~Jlit • ~ rf r~"1"/ I t~.,Q , .1 - ~ f1
_ ~ti
September 13, 1988 \
Mr, Charles B, Linton
Administrator /8~ay
Flow Regional Medical Center 71
1310 Scripture
Denton, TX 76201
Dinar Mr. Linton:
You have requested that the city of Denton respond to a request
i
in ade of you from the Department Health and Human Services
regarding the release of Lien Loan #IX-609, for $290,000. Per
your request, it is the intention of the City of Denton to
assure the fulfillment of the hospital's loan obligation in
accordance with Section 1,4, Assumption of Hospital Debt, as
contained in the compromise settlement afire menl dated
December 4, ]987, as long as all parties honor the provisions
of that agreement.
If you need any further information, please do not hesitate to
contact me.
Very truly yours,
Lloyd V. Harrell
City Manager
LVFI; bw
4234NI
. i
010FICH OF THE CITY ATTORNEY
MEMORANDUM
TO: Honorable Mayor and Members of the City Council
FROM: Debra A. Dtayovitch, City Attorney
SUBJECT: Flow Hospital Closing
DATE: September lb, 1988
Well, it has been a busy day at City Hall and I just wanted to
let you know that I reached Bernie Duco at 11:30 this morning and
asked him to advise us by Monday of any steps that needed to be
taken by the City with regard to the hospital. We reviewed most
of the documents during a lengthy telephone conversation and
concluded that there were no steps that could be taken between ,
now and Tuesday that could offer the City any more protection. I
have submitted a carbon copy of John's memo regarding outstanding
liabilities.
Respectfully submitted,
DEBRA A, DRAYOVITCH
DAD:lh
xc: Lloyd V. Harrell, City Manager
attachment
3
CITY of ORNMAIF TEXAS MUNICIPAL BUILDING i DENTON, TEXAS 76201 / TELEPHONE (817) 566.8200
DATFs September 15, 1988
TOs Lloyd V. Harrell, City Manager
FPOMs John F. MoOranu, Executive Director of Finance
SUBJECTS FLOW HOSPITAL
I have reviewed with Debra the documents regarding the transfer of Flow
Hospital to Flow Regional Medical Center, Inc. and, in her opinion, the only
22tonlAal outstanding liabilities that the City could suo eibly be responsible
or area
1) The repayment of outstanding bonds 3290,OU0 Denton County-City of
Denton, TX Hospital Board Revenue Bonds, Series 1975, and $280,000
Denton County-City of Denton, TX Hospital Revenue Bonds, Series
1975-A);
2) The accounts payable liabilities on the records of the hospital as of
December 31, 1987, if final judgment for such liabilities is rendered
against the City and/or Countyl and
3) Potential liabilities resulting from malpractice lawsuits and other
claims existing as of December 31, 1987.
In order to determine the extent of the outstanding payable,, I mat yesterday
with James Montfort and was given the following informations
1) The outstanding principal balance of the 1975 and 1975-A bonds is
$330,000,00. Interest payments are due on December 30 and June 30 of
each year, with principal payments being due June 30,
~r
Memo to Lloyd V. Harrell
September 150 1988
Page 2
l) The accounts payable as of September 8, 1988 indicate that
$37,009,07 of outstanding invoices match up with outstanding
invoices that were provided to us by Flow Hospital on December
3
1, 1987, There is an additional $13,972.86 that it shows on
the
DecSepembertemb31er 8,
1987, 1988
Therereport
also an amount of a$41474.00prior to
, which
lists a pre-1987 liability but which did not show up on the
listing and could possibly be miscoded. Therefore, the
September 8, 1988 accounts payable listing provided by the
hospital shows a total of $55,455,93 for December 31, 1987 and
prior invoices,
It is my understanding that pursuant to the compromise and settlement
agreement, the city may be responsible for 50% of the outstanding bonded debt
and up to $400,000.00 in liabilities in the event that actions are asserted
plus judgment is entered against the City or County for liabilities existing
prior to December 31, 1987. Therefore, in the event of termination of the
agreement, it is possible the City may be responsible for $165,000.00 of
outstanding bonded indebtedness, plus interest, and should a court determine
we are responsible, a maximum of $55,455.93 in outstanding liabilities. In
addition to the above liabilities the total prior and current utilities
outstanding balances is $275,814.64 through September 8, 1988, 1 would also
like to point out that there are several notes payable that are lease-purchase
agreements for various fixed assets of the hospital. I do not believe that
the city would be liable for the continued payment of these leases, however,
the total outstanding balance for those items, as of June 30, 19881 is
$1,266,699.40. Both the City and County attorneys have maintained that the
City nor the County is not responsible for Flow's bills.
Should you have any questions regarding any of the above, please advise.
Ohl' F, Modrane
JFMiejn
3816?
M
~k
Q
CITY of DENTON, TEXAS MUNICIPAL BUILDING / DENTON, TEXAS 76201 / TELEPHONE (817) 566.8200
i
DATEt September 15, 1988
TOt Lloyd V. Harrell, City Manager
FROMt John F. McOrane, Executive Director of Finance
SUBJECTt FLOW HOSPITAL
I have reviewed with Debra the documents regarding the transfer of Flow
Hospital to Flow Regional Medical Center, Inc. and, in her opinion, the only
potential outstanding liabilities that the City could possibly be responsible
for aret
1) The repayment of outstanding bonds ($290)000 Denton County-City of
Denton, TX hospital Board Revenue Bonds, Series 1975, and $280,000
Denton County-City of Denton, TX Hospital Revenue Bonds, Series
1975-A);
2) The accounts payable liabilities on the records of the hospital as of
December 310 19870 if final judgment for such liabilities is rendered
against the City and/or Countyi and
3) potential liabilities resulting from malpractice lawsuits and other
claims existing as of December 31, 1987.
In order to determine the extent of the outstanding payablea, i met yasterday
with James Montfort and was given the following informationt
1) The outstanding principal balance of the 1975 and 1975-A ponds is
$330,000.00. Interest payments are due on December 30 and Juno 30 of
each year, with principal payments being due June 30.
11
blemo to Lloyd V. Harrell
Septembez 15, 1988
Page 2
2) The accounts payable as of September 8, 1988 indicate that
$37,009.07 of outstanding invoices match up wiCh outstanding
invoices that were provided to us by Flow Hospital on December
31, 1987. There 1s an additional $13,972.86 that it shows on
the September 8, 1988 report a6 being a liability prior cu
December 3l, 1987. There ie also an amount of $4,474.00, which
lists a pre-1987 liability but which did not show up on the
listing and could possibly be miscoded. Therefore, the
3rptember 8, 1988 account, payable listing provided by the
I hospital shows a total of. $55,455.93 for December 31, 1987 and
prior invoices.
It !o my understanding that pursuant to the compromise and settlement
agreement, the City may be responsible for 50X of the outstanding bonded debt
and up to $400,000.00 in liabilities in the event that ar,tions era asserted
plus judgment is entered againaC Che City or County for liabilities existing
prior to Decomber 31, 2987. Therefore, in the event of termination of the
agreement, it is possible the City may be responsible for $165,OOb.00 •o L•
outstanding bonded indebtedness, plus interest, and should a court determine
we are responsible, a maximum of $55,459.9 in outstanding liabilitie6. In
addition to the above ZiabiliCies the total prior and current utilities
outstanding balances is $275,814.64 through September 8, 1988. I would also '
11ke to point out that there era sevara2 cotes payable that are lease-purchase
agreements for various fixed assets of the hospital. I do not believe that
the city would be liable for the conCinued payment of these lessee, However,
the total outstanding balance for those ir.ema, as of June 30, 1988, is
$1,266,699.40, Roth the City and County atCOrnaye have maintained Chat the
CiCy nor the County is not responsible for Flow's bills.
Should you have any questions regarding any of the above, please advise,
___--_L~ ~~~'~--r
ahn F. McGrane
JFM►s,~n
3816P