Judge approves sales of 5 Steward hospitals in Mass.

A federal bankruptcy court judge on Wednesday cleared the way for Steward Health Care to sell five Massachusetts hospitals to new owners.

At a hearing in U.S. Bankruptcy Court in Houston, Judge Christopher Lopez approved the sale of St. Elizabeth’s Medical Center in Brighton, Good Samaritan Medical Center in Brockton, Holy Family Hospital in Methuen and Haverhill, Morton Hospital in Taunton and St. Anne’s Hospital in Fall River for a total of $343 million.

The vast majority of those funds will go to real estate, with a small fraction paying for hospital operations. However, Steward’s attorneys noted that the costs of closing the sales would exceed any proceeds the company receives.

The judge said the deals are vital for protecting patients.

“There are real people in these hospitals right now,” Lopez said. “The sale needs to happen and it will happen.

State and federal officials voiced their approval for the deals. But there was a strong objection from a group of Steward’s lenders, who argued they’re owed a share of the sale proceeds.

Michael Price, an attorney representing the group of lenders who helped finance Steward’s bankruptcy, said the lenders should not be asked to take “zero dollars.”

“We don’t want this sale to blow up unless it absolutely has to,” he said.

The judge said he would set aside $17 million of the sale proceeds and rule another day on how they would be allocated.

Candace Arthur, a lawyer for Steward, noted the for-profit health system would lose $17 million on the Massachusetts hospital sales. Still, she said, the deals are critical, because the alternative to selling the hospitals would be closing them, or continuing to operate them “to the detriment” of the company and its hospitals in other states.

According to bankruptcy experts, the hospital sales mark a significant milestone for Steward, which filed for Chapter 11 bankruptcy protection four months ago and has been operating at a financial loss.

Steward on Wednesday also received court approval for another round of financial assistance from Massachusetts officials. The company will rely on $42 million in state aid to help its hospitals stay afloat in September, until they transition to new owners. That’s on top of $30 million state officials provided in August.

State officials have also promised to help the hospitals’ new operators. Under the proposed deals, Boston Medical Center would take control of St. Elizabeth’s and Good Samaritan medical centers, Lawrence General Hospital would acquire Holy Family Hospital in Haverhill and Methuen, and Lifespan, a Rhode-Island based health system, would purchase Morton and St. Anne’s.

Gov. Maura Healey has said she plans to seize the St. Elizabeth's property by eminent domain and then hand it over to Boston Medical Center. The investors that own the property have vowed to fight this. The dispute could affect the final cost of transferring St. Elizabeth's to a new owner.

Two Steward hospitals — Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer — closed on Saturday, after Steward officials said they couldn’t find any viable buyers.

Meanwhile, Steward's chief executive, Ralph de la Torre, on Wednesday requested more time to comply with a subpoena to testify before the Senate Health, Education, Labor, and Pensions Committee. Through an attorney, de la Torre cited the ongoing bankruptcy proceeding as his reason for not complying with the subpoena, and said Steward has prohibited him from speaking about the company's debts, financial transactions and its bankruptcy.