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Chapter 11 bankruptcy offers benefits for medical centers

For many business owners in Massachusetts, filing for bankruptcy is a sign that a business has failed. However, the opposite is true. Pursuing a Chapter 11 bankruptcy as a business owner -- particularly as one who owns a medical center -- can lay the necessary foundation for a positive future.

For a hospital in another state, filing for Chapter 11 bankruptcy protection preserved its future. Many hospitals in rural locations are struggling due to issues such as declining or flat populations and the migration of customers who end up finding jobs in bigger communities and thus go there for their care. Another issue facing such medical centers is the widespread use of Medicaid and Medicare, which can cause vulnerabilities and financial losses.

In these cases, sometimes medical centers and other businesses begin to look for buyers for relief. However, if large amounts of debt are attached to them, they may be unable to attract these buyers. Filing for bankruptcy can offer them the financial relief they so desperately need. This is especially true when they have old debt or debt dating back several years, as new debt will immediately take priority over the old debt when determining what bankruptcy-related transaction proceeds will cover.

Navigating the Chapter 11 bankruptcy filing process properly is critical for such a strategy to be successful. However, understandably, business owners in Massachusetts may not know where to start and what to do next when it comes to seeking bankruptcy protection. Fortunately, an attorney can provide the necessary guidance for completing the process as quickly, efficiently and effectively as possible.

Source:, "The benefits of bankruptcy? How one hospital found redemption in Chapter 11", Beth Jones Sanborn, Nov. 16, 2017

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