I have often commented on the lack of investigative reporting done by the Journal News.
When it comes to New Rochelle, the areas “paper of record” literally does nothing other than publish press releases and regurgitate what their reporters are told by government officials with the occasional quote from an opposing point of view tossed in for good measure. The amount of original news reporting done by the Journal News is close to zero but in New Rochelle it is zero.
One of the exceptions at the Journal News has been Ernie Garcia who has done some fine reporting based on obtaining public records. Unfortunately, he seems to have gone astray over the weekend with a story entitled Sound Shore bankruptcy: CEO, others issued big checks before filing.
It would appear Ernie obtained court filings in the Sound Shored Medical Center bankruptcy case and became interested in payments made to three senior executives at the company. From his article it appears that he called Sound Shore Medical Center on July 2nd and, not getting, an immediate reply, drew the conclusion that he was being intentionally stonewalled.
Garcia wrote “The Journal News made repeated attempts, starting July 2, to get an explanation from the hospital” which “finally responded” on Monday.
While I suppose this could suggest some nefarious purpose, it might just as easily be that the office was lightly staffed over the Fourth of July weekend and they got back to him when things got back to normal. The article does not address this point.
The story revolves around payments made to CEO John Spicer and two other Sound Shore executives which Garcia posits are mysterious:
Two payments totaling $82,815 are detailed in court papers that also noted John Spicer’s biweekly salary of $32,644.24. The June 28 filing in the U.S. Bankruptcy Court showed that Spicer got his regular salary payments May 2 and 16, then two payments totaling $82,815 a little over a week later, on May 24.
The hospital’s interim chief financial officer and its in-house counsel also received payments May 24. Their payments matched the biweekly salary payments they received May 2 and 16.
The court papers don’t explain why the May 24 sums were paid to the executives.
So, the story is basically that there was some payments listed in filing documents that Garcia does not understand and so he uses innuendo to imply the payments are part of some back room deal to enrich three senior executives at Sound Shore. There is no particular urgency to reporting the story — the next court date is in August – but he apparently could wait to get a formal response, oblivious to the fact that as the papers were filed as part of an ongoing legal matter it may take some time to get approvals to release information or response to a media inquiry.
Garcia said he spoke with Amy Cassidy who told him “No one received any last-minute payments before the bankruptcy.” The implication being that Garcia was asking about “last-minute” payments suggesting he had already determined in his own mind that there was something nefarious about the payments.
I spoke with Cassidy myself earlier today who told me when she got back into the office on Monday she called Garcia to tell him the premise of his story was incorrect but that she would look into it and get back to him. He chose not to wait and ran the story without hearing back from her. Unless Garcia has something up his sleeve he looks a bit foolish.
Had Garcia been a bit more patient he might have gotten the statement I got, provided to me by Sound Shore:
The payments preceding the filing were due in the ordinary course of normal business and were retroactive for compensation that Mr. Spicer was previously owed. Mr. Spicer, along with all other manager-level employees at Sound Shore Medical Center, received a temporary pay cut in 2007; however, his paychecks were not adjusted accordingly when full salaries were reinstated in 2011. The additional payments in May retroactively compensated Mr. Spicer for the amount of his contractual salary.
Garcia may want to pounce on this statement as well but he might want to look before he leaps — or at least familiarize himself with the law under which Sound Shore Medical Center filed for bankruptcy (or as Garcia put it, was “led” into bankruptcy by John Spicer).
The transaction between Sound Shore and Montefiore is known as a “363” asset sale, a common transaction for non-profit hospitals in a distressed financial condition. The purpose of the section of the Bankruptcy code is to allow a company to sell its business “free and clear” of liens and other debts through an organized sale process. The ability to acquire the business without successor liability and credit risks is often critical to the buyer who might otherwise be unwilling to proceed with a transaction.
There is nothing in a 363 Asset Sale that says that employees don’t get paid their salary so paying Spicer or anyone else salaries that were due to them would occur regardless of whether the bankruptcy filing was made. What it may have done is obviated the need to file a motion with the bankruptcy trustee to make the payment had they waited until after the filing but, unless Garcia knows something he is not disclosing, there would be no basis for the judge to deny the motion.
Although no one has said, my take is that in cleaning up their finances prior to filing for bankruptcy, the finance people realized the error in not adjusting the three salaries in 2011 and were addressing that error.
Cassidy provided some additional updates on the Montefiore deal.
Sound Shore is moving through the Bankruptcy process and continues to operate business as usual. Montefiore Health System has added $4.75 million to its purchase offer to speed up the sale. The next Court appearance will be in August when the court will be asked to approve the Asset Purchase Agreement and authorize Sound Shore to sell its assets to Montefiore Medical Center.
I have to admit that what I find humorous about this is the criticism I get with Talk of the Sound that we supposedly do what the Journal News actually did here. I go to great lengths to document my stories, waiting sometimes for years to obtain public records under Freedom of Information Law, and wait to hear back from subjects of stories, the exceptions being the New Rochelle Board of Education which consistently refuses to respond and, more lately, the City of New Rochelle, which has adopted this position starting in February.
RELATED:
Sound Shore Health System Acquired by Montefiore Health System
A Few Words with Sound Shore Medical CEO John Spice on Montefiore Acquisition
Sound Shore Medical Bankruptcy Filing Documents