Another Hospital Bankruptcy, More to Follow in 2017

By: Laura Day DelCotto, Esq.

At least two hospitals have already filed for bankruptcy protection in 2017, and the year is young.  This follows approximately a dozen filings in 2016 nationwide, some closures and others to complete a sale transaction through the bankruptcy process.     The healthcare sector is in such flux that moving quickly to address and become informed on financial issues in relation to possible bankruptcy options is a key mandate for management and directors/trustees of all operating hospitals.

Atoka County Medical Center Files for Chapter 9

The most recent filing in Oklahoma is a chapter 9 case.   I have been involved in the several chapter 9 filings in Kentucky, and our Commonwealth is one of the 26 states that permit chapter 9 filings by governmental entities.    The Westlake Hospital in Adair County was a chapter 9 case since the hospital was set up as a quasi-governmental “hospital district” controlled by local government.

The Oklahoma-based Atoka County Medical Center is a critical access hospital with approximately $16 million in debt, much in bonding and USDA debt.  It filed on January 10, 2017, Case #17-80016 filed in the Bankruptcy Court for the Eastern District of Oklahoma.

About Hospital Bankruptcy in Kentucky

Hospital bankruptcies have some unique and complex issues.  Add the chapter 9 layer to them, and they are now exceedingly outside the norm in both substance and procedure.    Kentucky has many of its local hospitals set up in public “hospital districts” or “hospital corporations” with bonded indebtedness, and some are even owned at the county level and managed by a fiscal court or a special board of trustees.   It behooves all the citizens served or taxed by such entities to demand that management not wait until crisis mode, but to begin to explore options with plenty of time to make informed decisions about realistic options.

About DelCotto Law Group

DelCotto Law Group is Kentucky’s asset protection law firm known for its commitment to the lifetime success of its clients. With offices located in Lexington, Louisville and Danville, DLG serves Kentuckians with complicated financial matters, especially in the areas of bankruptcy, complex litigation, and estate planning. For more information about chapter 9 or DelCotto Law Group, please call (859) 231-5800 or email




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