AGREEMENT BUYS ELLINGTON HOSPITAL TIME IN BANKRUPTCY

Few government agencies ever declare bankruptcy, but when they do there is Chapter 9.

Fewer than 30 such cases likely have appeared in federal bankruptcy courts nationally since the law was adopted in the 1920s, said Cape Girardeau attorney Paul Berens, who is representing creditors trying to collect money from Reynolds County Memorial Hospital in Ellington.

"They make up less than 1 percent of all bankruptcies ever," Berens said.

Since 1985, the U.S. Bankruptcy Court for Eastern Missouri has only had one other occurrence of Chapter 9.

Chapter 9 bankruptcies are so rare probably because government entities generally have more ways to make money than private enterprise, Berens said.

The hospital, which declared bankruptcy in 1995, had been making regular payments on its debts of more than $1 million until last year. This apparent lapse caused the hospital's creditors to file a contempt of court charge, Berens said.

Berens appeared alone before U.S. District Judge Barry Schermer on Tuesday, having agreed on a plan of action with the hospital's attorney, Scott Moore of St. Louis, prior to the hearing.

Attorneys have agreed that within 30 days the hospital will turn over bank statements, tax receipts and others records dating from 1998 to creditors. This puts a contempt ruling on hold for now, Berens said.

"We just want to determine where the money went," Berens said.

The original bankruptcy plan arranged for annual payments to be made from tax revenues. A fourth of revenues would go to unsecured creditors, another fourth to repay Medicare and Medicaid overpayments, and half to the IRS. After the two government entities were repaid, all of the payments would be given to the unsecured creditors.

"It was just starting to get to the point where the unsecured debtors would be getting something more," Berens said.

Along with financial records, Berens is asking the hospital to provide a list of employees with relatives who serve or have served on the hospital's board and a history of employee raises for the past two years.

If creditors are not satisfied with the records the hospital provides, Berens will have his own accountants examine hospital records, he said.