MONTGOMERY, Ala. (WSFA) – A federal judge has approved additional funding to help keep Jackson Hospital’s doors open – for now.
Jackson Hospital’s financial future remained uncertain Tuesday as representatives appeared in federal bankruptcy court in downtown Montgomery.
The bankruptcy court needed to approve funding for the struggling facility. However, creditors willing to provide that funding have been demanding more authority over the hospital’s operations, a proposal that has drawn opposition from the hospital’s bondholders.
The decision to approve funding was reached following testimony that the hospital would not be able to remain open through the end of October without additional financial support.
The ruling extends an existing loan from 22 to $25 million. It also opens the possibility for an additional $25 million. However, lenders said Jackson Hospital must obtain $100 million in government grants from the city, county and state for that to happen.
Jackson filed for bankruptcy this year after defaulting on $60 million in bond payments in 2024. The bond holders are against the additional funding saying the hospital is losing money, and additional loans negatively impact its investments.
During an hours-long hearing last week, Judge Christopher Hawkins asked all parties to try to come to an agreement, but said if they couldn’t, he would make a ruling about whether to approve additional funding.
Jackson Hospital’s financial future remained uncertain Tuesday as representatives appeared in federal bankruptcy court in downtown Montgomery. (Jackson Hospital)
In a hearing one week ago, the hospital’s CEO warned that the hospital does not have sufficient cash on-hand for an orderly shutdown, should that become necessary.
Staff departures amid closure threat
A chief restructuring officer testified Tuesday that some hospital employees are leaving because of the threat of closure, adding to the facility’s operational challenges. No specific details were immediately available.
An investment banker told the court that Jackson Hospital needs $50 million in aid from city, county, and state governments to move forward. However, later in the hearing, the lender clarified it requires $100 million in government aid, which the addition hospital funding would be contingent upon.
The Montgomery City Council passed a resolution last week expressing interest in providing financial assistance to Jackson Hospital. However, similar commitments have not been made at the county or state level at this point.
Hospital representatives have said that without more money, they cannot keep the doors open beyond the end of this month, leaving the community’s healthcare access in jeopardy.
Attorneys for the bondholders requested an emergency stay following Tuesday’s ruling. Both sides will be back in court Thursday.
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