Creditors Object to More Debt for NPHS Amid Chapter 11 Filing

Following the recent Chapter 11 filing for North Philadelphia Health System, some creditors are voicing their concerns and objecting to the tax-exempt organization’s plan to go into more debt to get through bankruptcy.

Unsecured creditors filed objections to the plan on Tuesday, according to an article on, saying they feel the organization must prove its viability before borrowing more money.

NPHS provides healthcare through prevention, education, and treatment in their hospital and community, including services and special programs for persons with behavioral medical disorders and/or extended acute medical conditions. They offer services in a manner that is spiritually and culturally sensitive and responsive to community needs, according to their website.

North Philadelphia Health System states its vision is to be the region’s premier provider of behavioral and extended acute medical services. Through the provision of high quality, innovative, culturally sensitive services, North Philadelphia Health System will meet the needs of the community it serves.

North Philadelphia Health System will continue its commitment to the under-served patient population in all its plans for services expansion.

The banckruptcy filed by NPHS last year was due to the fact it couldn’t pay its $400,000 mortgage that was due Jan. 1. The organization sought to protect millions of dollars held by the mortgage trustee, so filed for bankruptcy.

“The bankruptcy was portrayed as a maneuver to eliminate leftover liabilities from St. Joseph’s Hospital, which NPHS closed last March, after the Pennsylvania Department of Human Services pulled a long-running subsidy. St. Joseph’s is under an agreement of sale for $8.1 million,” the article reads.

People on the creditors committee are questioning whether there is a reorganizational plan available for the debtor – or whether they plan to focus on liquidation. North Philadelphia Health System’s bankruptcy attorney released a statement saying the system would provide information to allay the creditors’ concerns.

Talks of selling, refinancing and mergers were also brought up.

“NPHS’s plan is to continue providing drug and alcohol services and psychiatric care at Girard Medical Center, at Eighth Street and Girard Avenue, but the committee of unsecured creditors said it is not clear that Girard can be operated profitably,” the article reads.

The committee has said their plan to borrow $3 million dollars and use $1 million of that to repay pre-bankruptcy debt, should be halted until NPHS reduces expenses, including executive compensation. One example was the cost of a vehicle the debtor was paying more than $1,000 for each month – the other is the debtor’s annual pay, which a Feb. 17 filing claims is the highest paid rate of a healthcare executive in the region compared to the size of the organization.

NPHS assured the committee that the vehicle has been given up and that the debtor – along with other executives – took a 10 percent pay cut.