Prospect Medical Holdings, Inc. and its affiliates filed for Chapter 11 bankruptcy protection in the Northern District of Texas (Case No. 25-80002) on January 11, citing operational challenges stemming from the COVID-19 pandemic and significant pension obligations.
The healthcare provider, which operates 16 hospitals across California, Connecticut, Pennsylvania, and Rhode Island, disclosed approximately $2.3 billion in funded debt obligations in its first-day declaration. Paul Rundell, the company's Chief Restructuring Officer, detailed how pandemic-related disruptions and mounting labor costs have strained the company's operations.
The filing reveals that Prospect carries approximately $229.6 million in workforce-related obligations, including $117 million in employee compensation obligations and $112.6 million in employee benefit obligations. The company employs approximately 12,500 people, including 9,200 full-time and 3,300 part-time workers.
According to court documents, Prospect has been pursuing strategic alternatives since 2019, including the sale of various facilities. The company has reached an agreement to sell its PhysicianCo division to Astrana Health, Inc. for approximately $745 million, with the transaction expected to close by Q2 2025.
JMB Capital Partners Lending, LLC has committed to provide $100 million in debtor-in-possession financing to support ongoing operations during the bankruptcy process. The company is being represented by Sidley Austin LLP as counsel in the proceedings.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.