Bankruptcy pour in from Stoneham businesses
Published on February 10th, 1999
STONEHAM, MA - It was no surprise last Thursday afternoon when Boston Regional Medical Center executives filed for Chapter 11 bankruptcy in Boston. This move was expected not only because of the weeks of media exposure delving into the steep debts that the hospital has incurred in recent years, but also because the closing of businesses in Stoneham has become something of a trend.
In early December, Caldor Corporation announced that it would be selling the rights to its 145 stores and selling out its merchandise as part of its bankruptcy liquidation. Among the legion of Caldor stores to be closing its doors will be the Redstone Shopping Plaza mainstay, located at 109 Main Street.
Around the same time, another seemingly solid Redstone Shopping Plaza business, Bed & Bath, came under scrutiny due to publicity of its parent company, Boston Bed & Bath, having financial difficulties. On February 3, the company announced that it would also be liquidating its merchandise and, on February 5, the going-out-of-business clearance commenced.
With these two corporate businesses failing to make the grade financially, it came as little surprise that Boston Regional Medical Center (BRMC) would buckle under the strain of the present day health care marketplace.
<U>Boston Regional</U>
Administrators from the 195-bed hospital traveled to the Tip O'Neill Building in Boston's North End on Thursday and officially declared BRMC bankrupt. The Chapter 11 filing, however, allows the hospital seven days to find a prospective buyer. The deal must then be accepted by a US Bankruptcy Court judge.
The hospital's troubles were escalated in recent weeks when Doctor's Health Care Corporation (DHCC), formerly Doctor's Corporation of America, pulled out of its initial agreement to purchase the hospital. The deal was announced in March of 1998, but fell through most likely due to the significant debt accumulated at the local hospital.
Sharon Kirsch, spokesperson for DHCC, would not confirm nor deny this speculation when reached by the Stoneham Independent earlier this week at her Pleasant Valley, Arizona office. She did, however, admit that her company has withdrawn from purchase talks and is no longer on BRMC's wish list.
"Following a rigorous review of the hospital," she explained, "...the current obstacles make it impossible for Doctor's Health Care Corporation to further its efforts with the hospital."
According to BRMC spokesperson Christine Hawrylak, administrators are still hoping for a solid deal to come through.
"There are several proposals on the table," she explained. "Those proposals will be presented to the judge on Thursday, from what I understand, and then he will decide which, if any, will be accepted."
The downward trend in local business is bad news for creditors, patients and employees just to name a few. At Boston Regional, the jobs of nearly 900 full-time and part-time employees hang in the balance.
According to documents filed with the US Bankruptcy Court, BRMC has accumulated approximately $60 million in debts in recent years. Just last year, the hospital reported that it has lost $7.8 million.
<U>Redstone Shopping Center</U>
Although Main Street and Stoneham Square have always been areas which attract commerce, Redstone Shopping Center remains the hub of retail traffic. This would indicate that keeping the storefronts occupied would be of the utmost importance not only from a merchant's standpoint, but also for consumers and for those in the job market.
Al Rocco, director of Community Centers with the firm in charge of managing Redstone, says that the downfall of Caldor and Bed & Bath will not have too serious an impact on the shopping center.
"There's no telling what's going to go in there in the future, but it's a good location so we don't think there will be too much of a problem," Rocco stated. "This is a very viable center for us."
He explained that the Caldor Corporation is currently trying to sell the leases for all its properties. According to recent media reports, negotiations with Wal-Mart and Kohl's Corporation are advancing, with both companies intending to buy some of the leases. Analysts have also predicted that the Target chain and Kmart may also be in the hunt.
Rocco said that the lease for Bed & Bath will be sold off by his firm, SR Weiner Associates, once the closing is complete. He refused to comment on prospective buyers, although he did offer that "several possible tenants" have expressed interest in the property.
"We're at full capacity there," Rocco said of Redstone's retail population at present. "We're pretty proud of that and intend to keep that full."
<U>Local Reaction</U>
These recent developments are harmful to the town itself, Steve Sadwick, Stoneham's director of Community Development, said.
"Obviously, we've got employment issues. That's the biggest problem," he explained. "Due to the location of Stoneham, I don't think it will be difficult to fill the vacancies in Redstone. It's Boston Regional that you have to worry about."
Sadwick explained that the town is presently considering ways in which to attract new businesses and, thus, increase revenue in terms of corporate property taxes. One area of town which some local figures feel may be most attractive to the corporate market and most readily developed is on Fallon Road, just off of the Winchester Highlands exit of Route 93.
At the present, though, the town is focusing on the problems that have arisen due to the likely closing of three of Stoneham's largest businesses.
Sharon Iovanni, director of the Stoneham Chamber of Commerce, said Stoneham will feel the impact of BRMC's closing for a long time to come if and when it happens, and added the loss of Caldor and Bed & Bath needs to be addressed.
"The loss of the hospital is going to have a major impact on those employees and, ultimately, on the communities they come from," she said. "The hospital has always been very good to the community. Very cooperative and very generous.
"There are plenty of places (in Stoneham) for new businesses to open. There are certainly places along Main Street open that we'd love to see filled.
"All of the smaller businesses are hopefully going to benefit from the bigger stores closing, but any time you have open space, it's not good."
The Chamber of Commerce's constituency, which is composed of mostly smaller businesses in town, isn't feeling much negative impact in terms of sales, Iovanni said.
"My impression is that their businesses are good," she said of the membership which is growing by five to six members each month. "This is really not an industrial-based community, so to have five to six new members a month tells me that we have a growing business community."
With Stoneham's biggest business facing its demise, however, the town can only wait and hope for an eleventh-hour miracle.
"Obviously we're concerned not only from a financial aspect, but also that the hospital has been a huge asset to the community," Town Administrator Jeffrey Nutting said. "Since we don't know anything (about negotiations between BRMC and prospective buyers), that leaves a big question."
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