Another of Kentucky’s rural hospitals just filed bankruptcy, stating that it has been exploring sale options for a year, and that it has recently decided that a sale through the bankruptcy court process is its best option.
The Owen County Hospital filed for chapter 11 liquidation on May 29, 2015 in the Bankruptcy Court for the Eastern District of Kentucky, Case No. 15-30235. The Debtor is a company called “New Horizons” which operates the hospital. According to papers filed with the Court, the Hospital serves the counties of Owen, Gallatin, and Carroll and has operated continually since 1951. It is a designated “Critical Access” hospital, as are so many of the rural hospitals throughout the Commonwealth of Kentucky.
Pre- filing debt is primarily held by the USDA in a secured loan of approximately $4.3 million, and two large litigation claims which together total almost $6.0 million. There is no mention of any dispute with CMS on recoupment of alleged overpayments, which often creates a crisis situation for health care entities. The Hospital states that it intends to remain open until it can be sold.
Bankruptcy sales are often used and often favored by interested prospective buyers so that they can be assured of wiping out much of the debt and getting assets “free and clear” of claims. More to follow on how this case is meeting that stated goal.