In late April, three employees jointly filed the involuntary bankruptcy petition for Florence Hospital, seeking $46,650 in wages. Gilbert Hospital’s involuntary bankruptcy petition, which seeks more than $1.9 million, was filed by the hospital’s founder and CMO Timothy Johns, MD, an unsecured creditors’ trust and a Phoenix-based law firm.
Involuntary bankruptcy is a legal proceeding used by creditors who feel they will not be paid unless a company enters bankruptcy. In court documents filed May 1, creditors claimed the two Arizona hospitals failed to make lease payments for months and that the facilities are “on the brink of complete shutdown.”
After creditors ask the court to initiate bankruptcy proceedings, the debtor has the opportunity to contest the petition. The two Arizona hospitals failed to contest the petition within the required 21-day timeline, and the court subsequently granted creditors’ request for relief through the Chapter 11 bankruptcy process.
This is the second time Gilbert Hospital and Florence Hospital have landed in bankruptcy court. The hospitals filed for voluntary Chapter 11 bankruptcy in 2014, according to court documents.
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