(Bloomberg) — Prospect Medical Holdings Inc., once an active buyer of cash-strapped hospitals, filed for bankruptcy after struggling with debt piles and soaring costs.
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The company listed $1 billion to $10 billion in assets and liabilities each, along with more than 100,000 creditors, in a bankruptcy petition filed in Texas on Saturday.
Prospect Medical, which provides services in places including Southern California, Connecticut and New Jersey, manages networks of more than 11,000 doctors and operates more 16 hospitals, according to its website.
The firm is the latest hospital operator to stumble after a May bankruptcy filing by Steward Health Care System LLC, which provides services in Massachusetts. The failure prompted debate about the regulation of private equity-owned hospitals whose failure could post serious threat to local communities.
There had been signs of distress at Prospect Medical since last year, when hospital landlord Medical Properties Trust Inc. sought to take control of some of the firm’s health care entities while accusing it defaulting on debt.
Medical Properties said Sunday its priority will be to protect its investment in Prospect’s California hospitals. The landlord also expects to support Prospect’s efforts to complete a sale of its Connecticut facilities, according to a statement.
The company has appointed Sidley Austin LLP as general bankruptcy attorney, Alvarez & Marsal as financial adviser, and Houlihan Lokey Inc. as investment banker, according to the court document.
The case is Prospect Medical Holdings, Inc., 25-80002, in the U.S. Bankruptcy Court Northern District of Texas.
(Updates with Medical Properties statement in sixth paragraph.)
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