Force Ten Partners Helps Secure Bankruptcy Court Approval of Sale of Watsonville Community Hospital and Position Long-Struggling Hospital for Financial and Operational Turnaround

Force Ten Partners LLC (Force 10) announced today that it has helped secure bankruptcy court approval of the sale of Watsonville Community Hospital to the Pajaro Valley Healthcare District Project (PVHDP) and position the hospital for a financial and operational turnaround.

The hospital has been struggling financially for years and was on the verge of shutting down when Force 10 partner Jeremy Rosenthal was appointed Chief Restructuring Officer in September 2021. Rosenthal and the Force 10 team, led by partner Nicholas Rubin, were engaged to provide financial and operational support and expertise to the hospital.

Through their efforts, Rosenthal and the Force 10 team were able to stabilize the hospital's financial and operational challenges and lead the Chapter 11 bankruptcy process. Rosenthal successfully negotiated the Debtor in Possession financing and the sale to PVHDP that have enabled the hospital to remain open and continue providing much-needed healthcare services to its underserved community throughout the Chapter 11 reorganization.

On Feb. 23, 2022, Judge M. Elaine Hammond of the United States Bankruptcy Court, Northern District of California, San Jose Division, (Case No. 21-51477 (MEH)), approved the sale of the hospital for $34 million plus assumed liabilities to a newly formed healthcare district that was formed to succeed PVHDP.

"I am gratified that the Court approved the sale of the hospital to the healthcare district, assuring its continued operation as the critical provider of medical services to its community. This was made possible through the support of state and local government together with the regional medical and business community. I applaud the dedicated efforts of the Force 10 team headed by Jeremy Rosenthal, which provided critical support to the hospital in achieving this result," said David Gordon, an Independent Director on the hospital's Board of Directors.

"Force 10 effectively balanced industry expertise with on-the-ground management insights to begin the hard work of stabilizing the hospital for the benefit of the future healthcare district and the residents of Pajaro Valley. Jeremy Rosenthal and his team worked closely and successfully with the PVHDP team. The quality of their work and collaborative approach has given the hospital a promising new start and a firm footing for the lasting viability of the hospital," said Mimi Hall, former Santa Cruz County Health Officer and Chairperson of PVHDP.

The hospital is also being advised by the law firm of Pachulski Stang Ziehl & Jones LLP, led by attorneys Debra Grassgreen, Maxim Litvak and Steven Golden. The Official Committee has been advised by Paul Jasper of Perkins Coie LLP and Andrew Sherman of Sills Cummis & Gross P.C. The hospital retained Cowen and Company, led by Lorie Beers and Justin Magner, as its investment banker.

"This case has provided Force 10 with the incredible opportunity to work closely with Pachulski Stang, Perkins Coie and Sills Cummis to preserve the hospital for the community of Santa Cruz and Monterey Counties and navigate what we anticipate will be a consensual plan of reorganization," said Jeremy Rosenthal, Chief Restructuring Officer of Watsonville Community Hospital.

About Force Ten Partners LLC

Force Ten Partners, LLC, is an advisory firm with deep domain knowledge in financial and operational corporate restructuring, fiduciary, valuation, forensic accounting, and complex litigation support. Force 10 serves middle-market companies as well as their creditors, stakeholders, and professionals by providing turnaround-management services (CRO), fiduciary and financial advisory services, expert witness support, and investment banking services.