Two years after Hahnemann University Hospital went bankrupt, the legal war over proceeds from the eventual sale of the hulking Center City property is heating up, with an early skirmish expected at a Wednesday court hearing, the Philadelphia Inquirer reported. The latest conflict arises from the split of the Hahnemann and St. Christopher’s real estate from the hospitals, which filed for chapter 11 protection starting on June 30, 2019. The real estate was kept out of the bankruptcy. Some saw that split as an insidious move by Joel Freedman, the California businessman who paid $170 million — all of it borrowed — in 2018 for Hahnemann and St. Christopher’s Hospital for Children, to ensure that he would make money no matter what. First, Freedman agreed to court-approved mediation that could lead to some of the money from the sale of real estate going to businesses left with unpaid bills after the bankruptcy. Creditors have filed $8.5 billion in claims in the bankruptcy — though unduplicated claims are likely to be less than $300 million, a filing said. It’s too early to say how much money has been collected to pay those claims. And now, Freedman’s partner and major lender, Harrison Street Real Estate, wants to participate in the talks among the bankrupt business shells, unsecured creditors, and Freedman. Without Harrison Street’s participation, mediation “is doomed to fail” because it would have to approve any agreement, the Chicago real estate investment firm said in a filing. It’s unclear how much the Hahnemann buildings that Freedman owns will sell for because they are in poor condition, making them a costly redevelopment project. Lawyers for the bankrupt shell of Hahnemann have opposed the participation of Harrison Street in talks with Freedman, arguing that Harrison Street’s participation would slow progress, especially given that Harrison Street has refused to provide any documents during the unsecured creditors’ investigation of the original deal. Freedman has said that Harrison Street should participate in the talks. The dispute is scheduled for an online hearing Wednesday before U.S. Bankruptcy Judge Mary F. Walrath in Wilmington.
