Waterbury, Connecticut, is on edge as a bankrupt hospital chain scrambles to keep its doors open with a fresh $30 million loan.
According to CT Insider, Prospect Medical Holdings, a California-based company in Chapter 11 bankruptcy, has secured court approval for emergency debt financing to sustain operations at its hospitals, including Waterbury Hospital, while facing massive debts and an uncertain auction process for its Connecticut facilities.
Let’s rewind to 2016, when Prospect, backed by private equity, acquired three Connecticut hospitals—Waterbury Hospital, Manchester Memorial, and Rockville General—for $205 million.
On January 11, Prospect filed for Chapter 11 protection in a North Texas bankruptcy court, citing debts between $1 billion and $10 billion.
This wasn’t a small misstep; it’s a financial quagmire that’s left communities like Waterbury holding their breath.
Initially, court filings projected an auction and sale of the Connecticut hospitals by early June, but that deadline has slipped indefinitely.
A federal judge recently approved $30 million in emergency debt financing from lender JMB, on top of an earlier $100 million loan package.
Prospect argued this cash infusion was critical to avoid layoffs and service reductions at its hospitals in California and Connecticut.
JMB has also dangled an additional $55 million in funding if Prospect hits certain auction milestones for its California hospitals by mid-August.
Meanwhile, Waterbury Hospital’s fate remains unclear, with at least four parties reportedly interested in buying the Connecticut facilities.
But closure fears loom large, as a shutdown would leave only Saint Mary’s Hospital to handle emergency care and other services in the city. “That would be the biggest nightmare,” said Mayor Paul K. Pernerewski Jr.
Beyond operational woes, Waterbury is grappling with nearly $22 million in unpaid real estate and personal property taxes from Prospect for 2022 and 2023 assessments.
Prospect is contesting these taxes in state court, with a trial set for August 27, while city officials have deemed $18.4 million in 2024 and 2025 taxes as uncollectible, placing them on a suspense list.
This list doesn’t erase the debt—it remains collectible for 15 years with an 18% annual interest rate—but it signals deep skepticism about recovery, a bitter pill for taxpayers already wary of corporate bailouts and fiscal mismanagement.