A judge signed a temporary restraining order against the city of Pharr on Thursday, prohibiting the city from acquiring the assets of Hidalgo County EMS.
State District Judge Roberto “Bobby” Flores signed the temporary restraining order Thursday at the request of Lorena Singh, a social worker who ran for Pharr City Commission in 2019.
“I don’t think that the city should be using taxpayer money to buy companies when they’re in bankruptcy,” Singh said. “They need to be more transparent. They need to let people know what’s really going on.”
Pharr City Attorney Patricia Rigney declined to comment on the lawsuit Thursday afternoon.
Hidalgo County EMS — a privately owned ambulance company that responds to emergency calls in Edinburg, Pharr and rural parts of South Texas — filed for Chapter 11 bankruptcy in October 2019.
Hidalgo County EMS hadn’t filed tax returns for 2017, 2018 or 2019. The company also owed about $2.6 million to the IRS.
Chapter 11 bankruptcy protects business from creditors while they attempt to reorganize debt. Hidalgo County EMS, however, never filed a reorganization plan.
The company hired Richard S. Schmidt, a retired bankruptcy judge, to serve as chief restructuring officer in September. Schmidt quickly concluded that Hidalgo County EMS couldn’t reorganize and needed to find a buyer.
Hidalgo County EMS held an auction last week. Pharr submitted the only bid.
During a hearing on Friday, an attorney for Hidalgo County EMS said the company had reached an “agreement in principle” with Pharr.
The city had agreed to acquire “substantially all” Hidalgo County EMS assets and “a large majority” of Hidalgo County EMS ambulance contracts, said the attorney, Nathaniel Peter Holzer of Corpus Christi.
Holzer didn’t provide any details about the bid, including the purchase price.
Several parties in the bankruptcy case, including TCF National Bank, filed limited objections to the sale during the past few days.
“The precise terms of the ‘agreement in principle’ are not known to TCF,” according to the motion filed by the bank on Wednesday. “Among the missing pieces of information are: the items being sold, the price being paid, the amount proposed to be paid to TCF and the date of closing.”
A hearing on the sale is scheduled for April 13.
Singh, a social worker who mounted an unsuccessful campaign for Pharr City Commission in May 2019, filed a lawsuit against the city on Wednesday and requested a temporary restraining order.
“We’re going to end up paying for it,” Singh said. “So I think the community deserves to know more information than they’re telling us.”
The lawsuit calls the bid “ridiculous” and demands the city provide the public with information about the agreement in principle.
“This bad purchase would put the taxpayers of Pharr in a difficult bind as they will assume not only the used assets, but also the debt of this defunct business,” according to the lawsuit. “This ‘agreement in principle’ was all done in the darkness and not in the public domain where citizens should have the opportunity to have details on the agreement and debate them in the spirit of open and good government.”
Flores, the state district judge, signed the temporary restraining order on Thursday morning.
The order directs Pharr to “cease and desist from considering, voting, or entering into any agreement—to include verbal or written— as it concerns the attempted purchase (whether direct or indirect) of Hidalgo County EMS or Hidalgo County EMS’s assets currently in bankruptcy court from the date of entry of this order until fourteen (14) days thereafter, or until further order from this Court.”
Hidalgo County EMS became aware of the temporary restraining order on Thursday afternoon.
Holzer, the attorney who represents Hidalgo County EMS, urged Singh’s attorney, Ruben R. Ramirez of Edinburg, to withdraw the lawsuit.
“As you may or may not know, a sale of the assets of Hidalgo EMS to the City of Pharr is supported by the State of Texas and by the United States government, and is currently under the supervision of Chief Bankruptcy Judge David R. Jones of the Southern District of Texas,” Holzer wrote to Ramirez in an email.
Holzer told Ramirez that Hidalgo County EMS would ask the bankruptcy court to dissolve the temporary restraining order.
“Your baseless lawsuit appears to be a political stunt with no basis in fact or law, and you have potentially endangered the safety and welfare of large numbers of citizens of South Texas by threatening the existence and operations of the largest 911 service provider in the area,” Holzer wrote to Ramirez. “I strongly urge that you withdraw the Petition and the TRO immediately. A counterclaim against your client for damages will be forthcoming if you do not.”