U.S. Bankruptcy Court for the Northern District of California Judge Stephen Johnson is determining the validity of the financial emergency that hospital administrators cited as the reason for filing for bankruptcy.
San Benito Health Care District, the board overseeing Hollister, Calif.-based Hazel Hawkins Memorial Hospital, voted May 22 of last year to file for Chapter 9 bankruptcy. A hospital spokesperson said the filing would allow it to “deal with larger issues we just can’t tackle outside of Chapter 9.” The decision came after the board declared a fiscal emergency in November 2022.
A trial was held in December after the California Nurses Association objected to the board’s argument that Hazel Hawkins was financially insolvent.
Chapter 9 allows financially distressed cities, hospital districts and other public entities protection from its creditors while they develop and negotiate a plan for adjusting their debt.
The hospital has three potential buyers.
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