The local hospital district will apply a rarely used legal remedy to protect itself from creditors as board members continue efforts to save Westlake Regional Hospital.
The hospital district board voted Tuesday night to file Chapter 9 bankruptcy, a federal action designed to allow time for municipalities, such as local governments and taxing districts, to reorganize and restructure their debt.
Lebanon attorney Elmer George said the local taxing district would file the federal bankruptcy in the Kentucky Western District in Bowling Green as early as Wednesday. Creditors would then be notified, including the Farmers National Bank of Danville and Spectrum Health Partners, which have filed lawsuits against the hospital district.
The hospital district board went into executive session for around 20 minutes before returning to an open meeting and voting to file for Chapter 9 reorganization. Board members also briefly convened as the hospital district corporation–a separate entity designed to allow the district to borrow funds–approving the same action.
Board chairman Craig Pyles said the filing would help the district address the $20 million “noose around our neck.”
“We are not closing. We are open for business. We will be open for business. We’ve got a plan, we’ve just got a $20 million debt, a noose around our neck with a big anchor that is pulling us,” he said.
Grab a copy of the Community Voice in the racks Wednesday afternoon for more details.