For-profit University General Health System, which closed one of its two hospitals in December, has filed for Chapter 11 bankruptcy protection as the Texas company seeks to salvage operations for its remaining hospital.
The company's debt totaled $10.2 million in late February but its assets amounted to $8.6 million, court records show.
The company's University General Hospital Dallas closed at the end of last year after hemorrhaging cash since its acquisition in late 2012. The remaining hospital, University General Hospital Houston, will continue to operate through the bankruptcy, as will the company's remaining outpatient operations.
"The filing was a difficult decision, but one that the board believes will allow the company to focus on improving operations at its flagship Houston hospital and creating a stronger financial foundation upon which to build its comprehensive strategic plan," Dr. Hassan Chahadeh, the company's CEO, said in a news release.
University General Health System's senior living arm is expected to be sold for $30 million under a pending deal. The Dallas hospital facility is also up for sale, said Jerry Falkner, a spokesman for the company. The company's stock will continue to trade.
Court filings said the Dallas hospital and several outpatient acquisitions failed to achieve projected volume and revenue. The company reported 13 deals for imaging, physical therapy and other ambulatory businesses in 2012 and 2013. The Dallas hospital began to lose $1 million per month after its 2013 acquisition, court records said.
The company's lack of cash forced executives to pay for some medical supplies themselves and in early February, creditors attempted to seize equipment from the Houston hospitals, the records said. Sheriff's office personnel “in seven police cars and a moving van entered the Houston hospital to execute judgments on behalf of four judgment creditors,” court records said. Attempts prior to bankruptcy to enter into a merger failed.
The company's most recent financial filing shows University General Health System ended 2013 with losses of $17.1 million on revenue of $164 million.
The company said it would receive debtor-in-possession financing from MidCap Financial Trust.
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