Knox Clinic Corp to increase payout to its creditors from 7% to 30% in reorganization plan
GALESBURG — The Knox Clinic Corp., which managed the clinic associated with Galesburg Cottage Hospital and is owned by Sanjay Sharma, is poised to increase the compensation to its unsecured creditors from 7% to 30%.
Richardo Kilpatrick, who has been appointed by the bankruptcy court of eastern Michigan as a subchapter-five trustee to help facilitate the Knox Clinic Corp.’s reorganization plan, announced he was “happy to report” the increase during a remote hearing on May 19.
The hearing was scheduled in order to hear objections or move forward with confirming the Knox Clinic Corp.’s reorganization plan.
Kilpatrick said he still has to work through various “language issues” with Sharma’s attorney Robert Bassel as a result of the changes negotiated into the reorganization plan, but said that he has no other objections.
Bassel requested 14 more days from Judge Maria Oxholm in order to finalize the resolutions in the proposed reorganization plan, and Oxholm ruled that the court will reconsider the plan on June 9.
Sharma’s Knox Clinic Corp. owes $4.29 million to 49 different corporations and individuals, including former doctors who worked at the Cottage clinic and entities that Sharma owns such as the SBJ Group Inc.
Oxholm responded that the increase in compensation was “substantial” and “good news.”
Deborah Fish, who has been appointed by the court as an ombudsman to oversee the quality of patient care during the bankruptcy proceedings, was also present during the remote hearing.
Fish made the court aware that she was going to lodge an objection to the reorganization plan over concerns about the corporation’s transition plan after its lease on its last remaining physical location at 834 N. Seminary ends on June 30.
But Fish indicated she is no longer lodging an objection as the corporation delivered Fish a transition plan on May 18 and she will be working with Sharma and his management to fine tune it before confirming the final reorganization plan.
“I didn't want to be in a position where the plan was confirmed and there was no court authority or governance and the patients could possibly be left in a lurch so to speak with a physical location closing and not knowing,” Fish said.
Oxholm announced at the beginning of the hearing that the court did not receive any objections to the reorganization plan except for a letter that was submitted by a doctor that once worked for the Knox Clinic, Dr. Mark DeYoung.
Oxholm said that the letter was filed as an objection but that upon further review it seemed to be a request for the court to reconsider its decision to deny changing the venue of the bankruptcy proceedings.
DeYoung filed to change the venue of the proceedings from the eastern Michigan to the Peoria area with two other doctors who worked at the clinic under the representation of Robert Lindstrom.
DeYoung was not present during the May 19 meeting and Oxholm noted that his counsel has not withdrawn, therefore the judge overruled DeYoung’s objection for lack of prosecution.
This article originally appeared on Galesburg Register-Mail: Cottage clinic, Galesburg IL, to increase payout to creditors
