Hospital Sued by Bankruptcy Trustee After Failing to Honor Asset Purchase Agreements

On Monday, Allison D. Byman, in her capacity as the Chapter 7 Trustee of Providence Hospital of North Houston LLC, filed a complaint in the Bankruptcy Court for the Southern District of Texas against Doctors Hospital 1997 LP, doing business as United Memorial Medical Center (UMMC), for breach of contract.

Per the complaint, the debtor filed a voluntary petition under Chapter 7 of the Bankruptcy Code on August 22, 2020. In August 16, 2019, Providence and UMMC entered into a contract which stated that UMMC would purchase the debtor’s assets for $1,500,000.  The defendant will make three payments of $500,000.  The first payment was due September 1, 2019.  The second was due August 16, 2019.  The final payment was due on October 1, 2019.  The contract further states if UMMC breached the contract, they would be liable for all damages.

Per the plaintiff, UMMC paid the first payment within the deadline.  Providence Hospital requested the defendant pay the second payment to the plaintiff’s affiliate, 1960 Physicians Associates; UMMC complied.  Providence claimed that UMMC failed to provide the third payment.  The defendant claimed they paid the plaintiff a total amount of $1,928,073.66 to the Debtor through 7 wire transfers and 1 check.  Per the debtor, only the first and second payments where received.

The plaintiff is represented by the Husch Blackwell LLP. The instant action is brought under Texas Civil Practice & Remedies Code § 38.001, for breach of contract for the purchase of the debtor’s assets and medical facility located at 16750 Red Oak Drive, Houston, TX 77090. 

The plaintiff is seeking declaratory judgement in their favor; an order to turn over $1,471,328.06 to  the Trustee, plus all attorneys’ fees as permitted under the Contracts and applicable law; and relief as the Court may deem just and proper.