Loan Keeps Brea Hospital From Closing

An 11th-hour loan saved an Orange County hospital from immediate closure Friday, even as a federally appointed trustee was preparing to sell the hospital’s assets to satisfy creditors.

Brea Community Hospital, a 162-bed acute-care facility that serves north Orange County and east Los Angeles County, had only $6,000 in the bank Wednesday, said Ivan Kallick, a lawyer representing the trustee.

The hospital is $13 million in debt, according to court papers.

Hospital management, which filed for Chapter 11 bankruptcy protection in January, told the court Tuesday it didn’t have the $320,000 it needed to pay the more than 200 hospital employees by Friday, Kallick said.

The announcement took creditors and the federal judge reviewing the case by surprise, he said. “It was very last minute.”

On Thursday, U.S. Judge John Ryan dismissed the hospital’s management and appointed a trustee to oversee administration while deciding how to dispose of hospital assets. If the facility becomes insolvent, the trustee would have to close its doors, Kallick said.

But on Friday, Prime Healthcare Systems LLC, which operates hospitals in Victorville and Chino and is interested in buying the Brea facility, loaned the hospital $500,000 to keep it running. Newport Beach-based Sovereign Healthcare, in partnership with a group of doctors, said it also had offered to buy the troubled hospital.

Brea Community’s chief executive and part owner, Gaetano Zanfini, declined to comment and referred calls to the hospital’s lawyer, Sarah E. Petty, who did not return several calls.

Kallick said trustee Richard Diamond’s first priority would be to keep the hospital open. Kallick said there were 20 acute-care patients on respirators who require close attention.

He said layoffs were planned but could not say how many employees would be affected or how long the hospital would stay open.

A decision on whether to sell the hospital whole or to close it and sell its assets won’t come for several weeks, Kallick said.

On Friday, patients arrived at the hospital unsure if their appointments would be kept.

Arturo Corral, 78, and his wife, Maria, arriving for an X-ray, said they learned Thursday that the hospital might close, requiring them to travel 15 to 20 miles to neighboring hospitals.

“This is the closest hospital we have,” he said.

Inside the cozy, Spanish-style building, employees said management had not informed them about the hospital’s fate.

Rose Mann, a pharmacy buyer who has been employed at the hospital for 20 years, said she would continue to go to work despite the uncertainty.

“This is like home to me,” she said. “When the doors are locked when I come in, that’s when I’ll know the place is closed,” she said.