Gilbert (Ariz.) Hospital and Florence (Ariz.) Hospital entered Chapter 11 bankruptcy in May after creditors tried to force the hospitals into bankruptcy to try and recoup $1.96 million they claim the affiliated hospitals owe.
In April, three employees of Florence filed an involuntary bankruptcy petition for $46, 650 in wages and the Gilbert involuntary petition was filed by the founder and CMO Dr. Timothy Johns, an unsecured creditors’ trust and a Phoenix law firm. Involuntary bankruptcies are used by creditors when they don’t believe they will be paid for goods or services they provided.
In court documents filed May 1st, creditors claimed the two Arizona hospitals failed to make lease payments for months and both facilities are “on the brink of complete shutdown.”
After creditors ask a court to initiate bankruptcy proceedings, the debtor(s) have the chance to contest the petition. The two Arizona hospitals failed to meet the 21-day timeline and the court granted the creditors’ request for relief through the Chapter 11 bankruptcy process.
This is the second time the two hospitals have been in bankruptcy court. The hospitals filed for voluntary Chapter 11 bankruptcy in 2014.