Res 1993-185 - Laserfiche WebLink

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¡'Ie- System is designed to allow funds to flow between and among Healthcare and its Subsidiaries and to track these intercompany transactions. In conjunction with the System, the accounting records of Healthcare and its Subsidiaries include due to/from accounts which reflect intercompany payables and receivables between Healthcare and the Subsidiaries. In general ,the System utilizes accounts consisting of the following types: (a) A depository account for each Hospital maintained in the city where the Hospital is located. All receipts from payors are deposited in these accounts. (b) A concentration account at Chemical Bank in New York, New York to which there is electronically transferred daily the available funds in the Hospitals' depository accounts. (c) Hea1thcare'g operating account also maintained at Chemical Bank. (d) A controlled disbursing account maintained at Chemical Bank for each Hospital used to pay checks presented for payment of operating expenses for the Hospi tal. No surp 1 us funds are maintained in these accounts, and funds are transferred from the Healthcare operating account in amounts sufficient to pay checks presented for payment each day. (e) A controlled payroll account maintained for each Hospital in, the city where the Hospital is located. These are minimum balance accounts, i , and funds are transferred from the Healthcare operat~ng account by check written on each Hospital's disbursing account. Checks are issued by the Hospitals to their employees, and other minor disbursements are required to the made by the Hospitals. During the course of Debtor's Chapter 11 case, Debtor lost its accounts receivable financing. In Debtor's business, receivable collection is slow. Debtor generally collects its receivables within 68 days. With the loss of receivables financing and the draws on cash required to satisfy the receivables financing obligation, a substantial portion of Debtor's net revenues became tied up in its working capital. Nevertheless, Debtor has been able to pay its post-petition operating expenses. Debtor was able to meet ongoing operational expenses from current revenues in part because Debtor stopped paying interest to HealthVest on its Secured Claim in October of 1992. As of June 30, 1993, Healthcare owed Debtor $3,148,020 for funds advanced by Debtor post-petition to Healthcare. Debtor's right to collect these amounts from Heal thcare is entitled to the priority of an Administrative Expense Claim and payment in full on the Effective Date of the Parent Plan. - 10 - a-201SS