Nevada County Picayune and Gurdon Times Newspaper Archive

Bankruptcy Options Are Deliberated

Financial reports for the past three months for the defunct Nevada County Hospital are bleak.

These reports show more money is being spent than is coming in.

In a called meeting of the Nevada County Hospital Board of Governors Wednesday afternoon, filing for bankruptcy was discussed.

Buneva Wood, comptroller, said about all the money she could collect has been collected, without going into garnishments.

She told the panel Medicaid can't write off the hospital's debt unless it files bankruptcy. According to the financial statement, the contingent liability due to Medicaid is $459,681. The hospital's other accounts payable total $426,970, with gross accounts receivable as of April 15 being $643,814. This results in a shortfall of $242.837.

Additionally, Wood said it is costing $8,962 per month to operate the facility. A total of $4,500 per month is being spent to cover these expenses, and this amount does not include any payment to Prescott Water and Light. The utility company, at this time, is not being paid.

In an effort to keep the vendors happy, Wood said some is being paid on the liabilities, and some equipment has been returned.

"We need to consider ourselves insolvent," she told the board. Wood said if the entity is sued and has one or two judgement issued against it, it would wipe out all cash and no more could be collected.

"From my judgement," Wood said, "the advantage of filing bankruptcy is one or two creditors wouldn't get everything. There would be equal distribution (of the assets)."

Board President Don Mitchell said they ought to file bankruptcy.

William Mullins asked what type.

Duncan Culpepper said there could be no reorganization, so a Chapter 11 would be out of the question.

Hospital attorney Glenn Vasser was scheduled to be at the meeting, but was unable to attend due to a death in the family.

Karen Ward said the county is trying to abide by the statute, which will allow the property to be sold. However, this does not address the issue of leasing.

According to Ward, the county has requested an opinion from the Attorney General asking if the hospital can be leased because it was not sold. In fact, there were no bidders when the property was advertised for sale after voters approved the sale.

"The county doesn't know what it can legally do yet," she said.

Another obstacle the entity faces, she said, is the county must get 75 percent of the appraisal price, which was more than $900,000.

Wood said there are some parties interested in leasing the building, but it is not known if the hospital can be leased at market value without a long-term agreement. This is if the hospital can be leased at all.

She said Danny Rodgers, deputy prosecuting attorney, interpreted the law saying the board could lease the assets.

But the issue of leasing the hospital is a gray area. No one is sure if it can be done, where the money from the lease would go or who would handle the transaction.

"It seems to me," Bill Taylor said, " if the hospital sold the home health unit and got nothing out of it, if we lease county property we're just negotiating for the Quorum Court."

Wood returned to the topic of finance, telling the panel there is an outlay of cash being spent to maintain the building. This money, she said, must be spent. However, it means vendors aren't getting paid.

She said the bulk of any more money she can collect will be completed in May. Anything else will come from garnishments.

"At this point," Wood said, "we're ready to do garnishments. But we'll have problem garnishing wages and to finance the facility."

Culpepper said the assets must be protected. "It would be improper of us to let them go and assume the quorum court will do something if we don't."

Wood then asked if the county would even be able to afford maintaining the building because of its financial status. However, she said there will come a time when the board can no longer do the maintenance.

Should the hospital file bankruptcy or lose law suits, Wood said, there will be no money for maintenance anyway, and the county would have to decide what to do.

Ward said there are parties interested in leasing the structure, and need something firm to base a decision on. "We need to move on," she said. "These people need answers. It's time for concrete answers."

Without legal advice, she continued, no moves can be made by either the hospital board or the quorum court.

Culpepper suggested writing a letter to the Nevada County Judge and all members of the quorum court, telling them the hospital has short time left, detail the situation and let them know with the possibility of bankruptcy.

He said if the court so chooses, a special session could be called to address the matter.

The board agreed with writing a letter to the judge and court.

Ward said the entire hospital board needs to be at the meeting so both entities can put their heads together and work toward a solution.