Rockdale, Texas-based Little River Healthcare plans to close its two hospitals by Dec. 7, according to a Worker Adjustment and Retraining Notification Act notice sent to employees.
In the WARN notice, which was obtained by KWTX, Little River Healthcare says it is closing the hospitals because it was unable to secure new owners for the facilities. A total of 298 employees will be laid off when the hospitals and their affiliated clinics shut down, a Texas Workforce Commission spokeswoman told KWTX.
Little River Healthcare filed for Chapter 11 bankruptcy protection in July and has faced financial and operational challenges since, according to documents filed in the bankruptcy case. The health system is seeking to convert the bankruptcy case to Chapter 7, allowing it to liquidate its assets.
Little River Healthcare claims its lender, Monroe Capital Management, has denied several funding requests, including one totaling $700,000 for the week ended Nov. 30.
"Without this additional funding the debtors are unable to satisfy in full the ordinary course obligations including payroll for the week ended November 30, 2018," states Little River Healthcare's motion to convert the bankruptcy case to Chapter 7 filed Nov. 30.
Monroe Capital Management explained why the recent budget requests were denied in an objection filed Dec. 4.
"Throughout these Chapter 11 cases, the debtors have been unable to operate within budget limitations, and their budgeted projections of receipts and expenses have consistently been inaccurate. The agent is unable to continue to fund the debtors' operations in light of information presented to the agent through recent funding requests and budget projections."
Monroe Capital Management claims recent projections provided by Little River Healthcare show the health system would have required additional funding of up to $7.1 million for periods after Nov. 17.
"Such increased needed advances, combined with significant collateral deterioration and the lack of consistency in the debtors' ability to accurately forecast or perform, showed a diminishing recovery with increased risk that the agent and the lenders could not reasonably agree to underwrite," Monroe Capital Management stated in court documents.
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