2012-09-14 / Community

PHC Auction Set For October 11

By Howard Schwach


PHC was closed in April after a fight on the part of the staff and the community to keep it open. PHC was closed in April after a fight on the part of the staff and the community to keep it open. The last remnants of the former Peninsula Hospital Center, which served Rockaway’s medical needs for more than 104 years, will be sold after an auction in Great Neck (Long Island) on October 11, federal court records show.

The bidding deadline for the nursing home, the clinic building and the main hospital building is October 4.

All of that despite the fact that bankruptcy court trustee Lori Lapin Jones has already cut a deal to sell the properties to nursing home magnate

Michael Melnicke and his two partners, Leo Friedman and Joseph Brunner. Bankruptcy law, however, requires an auction procedure and the Melnicke group is considered a “stalking horse,” or beginning bid that all the other bidders must exceed.

In addition to exceeding the bid, any successful bidder who offers a bid higher than Melincke’s must pay him a two percent fee for being the stalking horse.

Jones is the final arbiter of who gets the property, records show. She does not have to choose the highest bid, but may choose “the best” bid for the creditors of the hospital instead.

In late August, Jones moved in Judge Elizabeth Stong’s court to allow her to sell all of the real property to Melnicke, who already runs two nursing homes in Rockaway and who, with two partners, is buying the properties under four limited liability corporations that are mired in secrecy.

According to court papers filed with Judge Stong on August 9, Jones proposes to sell the properties to “four affiliated entities formed by Michael Melnicke, Leo Friedman and Joseph Brunner.”

Those papers show that Cardiff Bay LLC, which is registered to a Manhattan address, will buy the nursing home assets, while Beach 50th Street LLC will buy the nursing home real property, both for a total of $16,650,000.

The hospital real property will go to Beach Channel Drive Holdings LLC, which is registered in Albany (New York) as is Beach 50th Street LLC.

The cost for the hospital shell is $6,250,000. The clinic property, which presently houses a school program run by the Addabbo Family Health Center, will go to Beach 53rd Street LLC, which is registered in Albany as well.

All of the four LLC’s were set up during the month of July apparently specifically to buy the PHC properties.

The company hired by Jones to shop the properties initially identified 86 entities that might be interested in the properties and sent them a bid solicitation letter.

Papers show that 26 entities showed an interest.

A decision was made to sell the properties to one bidder rather than multiple bidders.

Jones says that she received “significant bids” from two bidders and that “parallel negotiations” were held with the two.

She then decided that “the purchaser’s offer was the highest and the best offer received,” and moved to sell the properties to Melnicke and his partners.

“Notwithstanding [the agreement], it is contemplated that the proposed sale will be tested by an additional solicitation process and auction during which the higher or better offers will be considered,” Jones added.

That auction will be held sometime in September, and the date is not expected to be announced to the community.

That solicitation process will begin on October 4, when the bids are due and end on October 15, when the court will approve the sale to the winning bidder.

Melnicke is a former board member of the Peninsula Hospital Center.

In 2006, he was given an award by the hospital’s trustees for his good work for the institution.

He is the owner and administrator of five nursing homes and the operator of a sixth, two of which are in Rockaway – the Rockaway Care Center and the Park Nursing Home.

His facilities together contain approximately 1,540 beds.

The agreement says that Melnicke does not have to assume any of the present collective bargaining agreements with the employees still working for the nursing home, but he does have to honor seniority and will have to “bargain in good faith with the applicable unions.”

It is unclear as to what he has in mind for the property and repeated calls to Melnicke at his Rockaway businesses went unreturned.

Calls to the offices where his four LLC’s are registered found answering machines, and those calls were never returned as well.

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