Penobscot Valley Hospital emerges from Chapter 11 bankruptcy
File Photo / Courtesy, Maine Hospital Association
Penobscot Valley Hospital, a 25-bed critical access facility in Lincoln, on Friday said it has completed a Chapter 11 restructuring.
Penobscot Valley Hospital, a 25-bed hospital in Lincoln that sought bankruptcy protection almost two years ago, on Friday afternoon said the critical access facility has completed a Chapter 11 financial restructuring process and emerged from bankruptcy.
Penobscot Valley remained open and did not lay off staff during the process. The hospital employs 175 people in the town of 5,000, about 50 miles north of Bangor and 30 miles south of Millinocket.
The 2015 closing of Lincoln’s major employer, the Lincoln Paper and Tissue mill, and the state’s previous failures to seek federal Medicaid expansion funds had precipitated the Chapter 11 filing in January 2019.
More than 900 jobs had been lost in the area. At the hospital, inpatient admissions had plummeted 65% and overall patient volume had sunk 10% over the previous four years. The ripple effects also included patients losing commercial health insurance coverage, and families moving out of the area, officials said at the time.
Penobscot Valley owed up to $10 million to more than 1,000 potential creditors.
Chapter 11 of the federal bankruptcy code allows businesses in debt to restructure their finances under a court-approved plan and be free from the threat of creditors’ lawsuits during that time.
The Penobscot Valley restructuring, in which Portland law firm Murray Plumb & Murray represented the hospital, was initially expected to last 12 to 18 months.
On Friday, Penobscot Valley CEO Crystal Landry said in a social media post, “Thank you to PVH staff and medical personnel who have all worked incredibly hard over the past 24 months to stabilize the hospital’s finances while continuing to provide excellent health care to our patients. We are proud to say we have succeeded in emerging from Chapter 11 bankruptcy during one of the most challenging times in our hospital’s history.
“Now, more than ever, the importance of strong rural hospitals is clear. We look forward to serving our community for decades to come."
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