It’s not uncommon for large institutions, such as hospitals, to encounter financial challenges from time to time. Such issues are sometimes able to be resolved by reducing overhead costs, downsizing, or cutting spending in a monthly or annual budget. Such measures are not always enough, however, to overcome severe financial crisis, in which case, other options, such as filing for bankruptcy, may be available. A hospital on the West Coast has recently done just that.
Liabilities and assets were within similar range
Representatives from the hospital in question said that they lost more than $32 million in revenue in the past year. The hospital is said to have assets valuing between $10 million and $50 million. Unfortunately, liabilities are listed within the same range, which may have influenced the decision to file for Chapter 11 bankruptcy.
Chapter 11 bankruptcy will enable the hospital to stay open
Hospital officials have stated that this particular bankruptcy program will enable the institution to continue to provide medical services to the community. A tentative agreement has also positioned a group to explore a possible purchase of the hospital. Chapter 11 bankruptcy is different from other types of bankruptcy, such as Chapter 7, which typically involves a complete liquidation of assets so that proceeds can be used to pay back lenders.
Business owners most often choose Chapter 11
Chapter 11 bankruptcy most often benefits business owners. However, there are certain cases where an individual may also apply for this type of debt relief. A first logical step to take to determine which bankruptcy option is best regarding an individual’s or business owner’s needs is to ask an experienced bankruptcy law attorney to review a specific case.