Nearly new Dallas-area hospital files for Chapter 11 bankruptcy

Trinity Regional Hospital Sachse, a full-service hospital near Dallas, filed for bankruptcy with plans to sell itself just two years after opening.

The hospital’s parent entity listed assets of as much as $100 million and liabilities of as much as $500 million in its bankruptcy petition. The hospital is in default on nearly $70 million of municipal bonds issued in 2020, according to data compiled by Bloomberg. 

Construction was financed with $67.5 million of bonds issued in 2020 through Wisconsin-based conduit Public Finance Authority, of which the $57.6 million Series 2020A-1 is tax-exempt, according to an official statement posted on the Municipal Securities Rulemaking Board’s EMMA Inc.

The hospital sector has suffered tremendously in recent years as they contend with higher labor costs and staffing shortages exacerbated by the pandemic. Meanwhile, rating downgrades have plagued the nonprofit medical sector as facilities continue to struggle.

“This is an example of a hospital faced with competition, the cost of construction and the cost of starting up being enough that it’s really created a very top-heavy balance sheet,” Jon Nash, the chief restructuring officer for the hospital and managing partner at MeadowLark Advisors, said in a phone interview. 

The Chapter 11 filing protects Trinity from creditors while it works out a way to repay them. It also allows the hospital to keep operating. 

Trinity has been shopping itself prior to the bankruptcy filing and now that process will move into “high gear,” Nash said. The facility is brand new and boasts state-of-the-art equipment, he added. 

The hospital has 32 inpatient beds, an emergency department, and surgery and imaging facilities, and was completed in August 2021, according to a document posted by the Texas Department of Licensing and Regulation.