The license of the former Pascack Valley Hospital will go to Hackensack University Medical Center, a federal bankruptcy court judge ruled Thursday.

Hackensack will pay the bankrupt hospital?s estate $850,000, under the agreement approved by Judge Rosemary Gambardella. The money will go to The Bank of New York Mellon, Pascack?s largest creditor.

The Valley Hospital in Ridgewood had offered more than $2 million to buy the license and kill it, but that plan failed. Valley and Englewood Hospital and Medical Center oppose Hackensack?s application to reopen a hospital in Westwood, saying the increased competition will have a devastating impact on other local hospitals and is not needed.

The decision Thursday clears the way for a state Health Department review of Hackensack?s proposal for a 128-bed hospital in Westwood. A public hearing has been set for June 8 at Westwood Regional Jr./Sr. High School

Members of the State Health Planning Board, who will make a recommendation to the state Health Commissioner about whether to approve the hospital application, will attend.

Westwood Mayor John Birkner Jr., said he was pleased at the judge?s ruling.

?Westwood is very happy,? he said. ?We?ve crossed another hurdle, taken a very big step in what we need to do to get a hospital here.?

Gambardella said her ruling causes no harm to the two hospitals that object to it, because their arguments will be heard as part of the health department?s review. The settlement approved Thursday will also avoid prolonged litigation over the license, the judge said.

She read her decision for two hours from the bench at the Bankruptcy Court in Newark, as attorneys representing the bankrupt hospital, its major creditor, the state Department of Health, Valley Hospital and Englewood Hospital listened on a conference call.

Immediately after she finished, the attorney representing the Valley and Englewood asked that the decision be stayed, pending an appeal.

?We believe Englewood and Valley are likely to succeed on the merits of the appeal,? said Steven Wirth, of Wollmuth Maher & Deutsch.

The judge, after listening to arguments from the other attorneys, refused.

?There?s a timing issue here,? said Gambardella, noting that the license will lapse on December 29. ?The public interest is served by having this matter resolved by state agencies with oversight over public health,? she said.

A decision about whether the proposed hospital?s beds are needed and what impact the hospital would have on existing hospitals is better made ?in a non-bankruptcy forum,? she said.

The objectors to the sale said they were not sure if they would make an additional appeal.

?We were disappointed with the Judge?s ruling,? said Megan Fraser, a spokeswoman for Valley Hospital. ?We now appeal to the Commissioner of Health to do the right thing ? and deny a certificate of need to open a hospital that is not needed and will devastate other hospitals in Bergen County.?

A spokeswoman for Englewood pointed out that the bankruptcy court had allowed an auction to the highest bidder of Pascack Valley?s paramedic license in 2007, and should have treated the hospital license the same way.

?We look forward to ? our opportunity to demonstrate to the state and public that re-opening this hospital represents irrational health planning,? said Maria Margiotta, the spokeswoman.

E-mail: washburn@northjersey.com