Hidalgo County EMS asks for court approval to hire new chief restructuring officer
Hidalgo County EMS filed an emergency motion Friday to hire a new chief restructuring officer, nearly six weeks after the federal government accused the company of fraud.
Hidalgo County EMS — a privately owned ambulance company that responds to 911 calls in Edinburg, Pharr and parts of rural Hidalgo County — filed the emergency motion Friday to employ retired U.S. Bankruptcy Judge Richard Schmidt as chief restructuring officer.
Schmidt would supervise the Hidalgo County EMS management team and replace Chief Restructuring Officer Omar Romero, who took the job after Hidalgo County EMS filed for Chapter 11 bankruptcy last year.
“During this transition, HCEMS would like to assure its employees, partners, and the community that this will in no way interrupt our daily operations and we will continue to strive to provide the best possible service,” according to a statement released by Hidalgo County EMS.
Bringing Schmidt onboard may allow Hidalgo County EMS to avoid the appointment of a bankruptcy trustee.
The federal government requested the appointment of a bankruptcy trustee in August, when it accused Hidalgo County EMS of making a false statement on a Paycheck Protection Program loan application.
“That false statement may result in a $2.5 million administrative claim against the bankruptcy estate, which may jeopardize reorganization and the jobs of those employed by the Debtor,” according to a motion filed by the government on Aug. 15. “People can dispute legal positions, factual assertions, the merits of claims, or even the wisdom of policy decisions—but there is no room to dispute that dishonesty by a debtor-in-possession threatens the integrity of the bankruptcy process.”
Hidalgo County EMS denied any wrongdoing and warned that appointing a bankruptcy trustee, who may not know anything about the ambulance business, could destroy the company.
“Schmidt has requested a 90-day period within which to conduct his due diligence and analysis of the company to determine the best path forward for the estate, within which time he would expect to either file a plan or commence a sale process,” according to the emergency motion filed Friday by Hidalgo County EMS. “Debtor therefore requests that the Court carry the USA’s motion to appoint a trustee without setting hearing for a period of 90 days.”
Richard S. Schmidt of Corpus Christi served as a federal bankruptcy judge from 1987 to 2015, according to his website. After he retired, Schmidt became a consultant.
“I am best known for my user-friendly judicial temperament, ability to quickly recognize intricate legal issues, legendary mathematical ability, and case management style, which helped navigate some of the largest and most complex bankruptcies in the country,” according to Schmidt’s website. “What sets me apart is the vast number of cases I have handled successfully, along with my leadership and organizational skills.”
Schmidt also serves on the Texas Ethics Commission and teaches business classes at Texas A&M University-Corpus Christi.
“Schmidt has extensive legal, business and management experience and is well qualified to serve in this capacity,” according to the emergency motion. “Schmidt is well known to this Court and to many of the parties in this case due to his 28-year tenure as a bankruptcy judge in this District, his numerous presentations at continuing education seminars, and his participation in various capacities in multiple bankruptcy cases since his retirement from the bench.”
Along with bankruptcy experience, Schmidt is familiar with emergency medical services.
Schmidt serves on the board of HALO-Flight, a nonprofit air ambulance service that covers 26 counties across South Texas.
Hidalgo County EMS agreed to pay Schmidt a $30,000 retainer when his employment agreement is approved by the court, according to the emergency motion. Schmidt would charge Hidalgo County EMS a flat fee of $30,000 for the first month, $20,000 for the second month and $15,000 for the third month.
After the third month, Schmidt would charge $500 per hour for work and $250 per hour for “non-working travel.”
Romero may remain with Hidalgo County EMS in another capacity.
“As previously disclosed to the Court, as of the end of January, 2020, the Debtor’s current CRO, Omar X. Romero and his consulting company Government Asset Services, stopped providing the Debtor with CRO and other services as an outside professional, and instead were hired by the Debtor as employees,” according to the emergency motion. “Mr. Romero retained the title of CRO, but will relinquish that title as of the date Schmidt commences his services as CRO. Mr. Romero’s ongoing responsibilities for the Debtor, and any title, will be determined by Schmidt.”
The emergency motion to employ Schmidt is subject to approval by Chief U.S. Bankruptcy Judge David R. Jones, who is presiding over the Hidalgo County EMS bankruptcy case.
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