WATSONVILLE—Watsonville Community Hospital (WCH) has begun Chapter 11 bankruptcy procedures, which officials say will provide the funding necessary to continue operating as the case commences and a local group prepares to purchase it.
The case was filed in the U.S. Bankruptcy Court for the Northern District of California. Under the bankruptcy procedures, so-called debtor-in-possession funding of about $16 million will give owners Medical Properties Trust the ability to pay its bills while the sale goes through.
The Pajaro Valley Healthcare District Project (PVHDP) has been named the “stalking horse bidder” for the bankruptcy procedure, defined as an entity chosen to be the primary bidder on a company’s remaining assets.
That organization, formed solely with the intention to make the purchase, came forward in October, one month before CEO Steven Salyer announced the hospital would have to close unless it found a buyer.
PVHDP reached a tentative agreement with the hospital on Friday.
The bankruptcy will be led by Irvine-based Force 10 Partners, a law firm that specializes in corporate restructuring.
“Our goal is to keep Watsonville Community Hospital open so that it can provide critical healthcare to the community while also saving approximately 650 jobs,” said Chief Restructuring Officer Jeremy Rosenthal. “We appreciate the continued support of our physicians, nurses, other staff, and labor union partners as well as our vendors as we work through this process.”
For information, visit cases.stretto.com/WatsonvilleHospital.
