NOTICE OF COMMENCEMENT OF CHAPTER 9 CASE
D. EDWARD HAYS, #162507
ehays@marshackhays.com
TINHO MANG, #322146
tmang@marshackhays.com
DEVAN DE LOS REYES, #355913
ddelosreyes@marshackhays.com
MARSHACK HAYS WOOD LLP
870 Roosevelt
Irvine, California 92620
Telephone: (949) 333-7777
Facsimile: (949) 333-7778
Attorneys for Debtor,
PALO VERDE HEALTHCARE DISTRICT
UNITED STATES BANKRUPTCY COURT
DISTRICT OF CALIFORNIA – RIVERSIDE DIVISION
In re: PALO VERDE HEALTHCARE DISTRICT,
Case No. 6:25-bk-17084-SY Chapter 9
NOTICE OF COMMENCEMENT OF CHAPTER 9 CASE
_________________
TO ALL CREDITORS OF PALO VERDE HEALTHCARE DISTRICT AKA THE PALO VERDE HOSPITAL, AND TO ALL PARTIES-IN-INTEREST:
COMMENCEMENT OF CHAPTER 9 CASE. On September 30, 2025, Palo Verde Healthcare District ("PVHD" or "Debtor"), a special hospital district which operates the Palo Verde Hospital located at 250 N. First Street, Blythe, California, filed a petition to commence a bankruptcy case under Chapter 9 of Title 11 of the United States Code ("Bankruptcy Code") in the United States Bankruptcy Court for the Central District of California, Riverside Division ("Court"). The United States Court of Appeals for the Ninth Circuit has designated the Honorable Scott H. Yun, United States Bankruptcy Judge, to preside over the bankruptcy case. All documents filed with the Court are available for inspection via the PACER system, which may be accessed on a subscription basis at the following internet address: https://pacer.uscourts.gov. PLEASE TAKE NOTICE THAT the Court conducts its hearings in-person in the courtroom and any party wishing to appear other than in person are required to comply with the Court's telephonic appearance procedures which are available online at the Court's website: https://www.cacb.uscourts.gov/judges/honorable-scott-h-yun
AUTOMATIC STAY. Pursuant to 11 U.S.C. §§ 362 & 922, the filing of PVHD's Chapter 9 petition operates as a stay, applicable to all entities, of all prohibited acts described in such sections, including but not limited to: the commencement or continuation of a judicial, administrative, or other action or proceeding against an officer or inhabitant of the Debtor, the enforcement of any judgment, any act to create, perfect, or enforce any lien against property of the Debtor, and any act to collect, assess, or recover a claim against the Debtor.
PURPOSE OF THE CHAPTER 9 FILING. Chapter 9 of the Bankruptcy Code provides a means for a municipality authorized under applicable state law to propose a plan of readjustment of debts under 11 U.S.C. § 941. In a Chapter 9 case, pursuant to 11 U.S.C. § 904, the jurisdiction and powers of the bankruptcy court are limited such that the Court lacks jurisdiction to interfere with: any of the political or government powers of the Debtor, any of the property or revenues of the Debtor, or the Debtor's use or enjoyment of any income-producing property.
DEADLINE FOR OBJECTIONS TO ELIGIBILITY AND ENTRY OF AN ORDER FOR RELIEF. Appended to the Debtor's Chapter 9 bankruptcy petition was a one-page statement of eligibility under 11 U.S.C. § 109(c), which is reproduced at the end of this Notice. Objections to the Chapter 9 petition and the Debtor's eligibility under Chapter 9 must be filed by a party with standing no later than 11:59 p.m. Pacific Prevailing Time on November 7, 2025. If you are an authorized user of the Court's CM/ECF electronic filing system, any such objection shall be filed via the Court's CM/ECF system. If you are not an authorized user of the Court's CM/ECF system, a written objection must be sent by means calculated to reach the Court no later than 5:00 p.m. Pacific Prevailing Time on November 7, 2025 at the following address: The Clerk of the United States Bankruptcy Court for the Central District of California, Riverside Division, 3420 Twelfth Street, Riverside California 92501-3819, to ensure it is filed by the deadline, and any filing may also be filed in-person at the intake counter. Any objection shall state the facts and legal authorities relied upon in support thereof, and shall be served on or before the same date on the following partiers: (1) the United States Trustee's Office; (2) the Debtor; (3) and the Debtor's attorneys.
HEARING ON OBJECTIONS. If no objection is timely filed, the filing of the petition shall be deemed an order for relief under Chapter 9 of the Bankruptcy Code, and this Notice shall be deemed notice of such order for relief. If a timely objection is filed and served, the Court has set a status conference on December 3, 2025, at 1:30 p.m. Pacific Prevailing Time at the United States Bankruptcy Court for the Central District of California, Riverside Division, 3420 Twelfth Street, Courtroom 302, Riverside, California 92301-3819. At such time, if objections have been filed, the Court may consider and resolve, as it deems appropriate, any fully-briefed objections to eligibility. The Court will also consider setting other dates in its discretion. FAILURE TO TILE A TIMELY WRITTEN OPPOSITION WILL RESULT IN THE ORDER FOR RELIEF BEING ENTERED.
Marshack Hays Wood LLP
Attorneys for Debtor PALO VERDE HEALTHCARE DISTRICT
This notice should not be construed as, and does not constitute, legal advice of any kind. The law firm of Marshack Hays Wood LLP only represents the Debtor and cannot give unrepresented parties any legal advice. Marshack Hays Wood LLP will not represent other entities, companies, or individuals in connection with this bankruptcy case. If you require legal advice, or need assistance preparing any legal paperwork, you must hire an attorney to represent you before the Court.
STATEMENT OF ELIGIBILITY UNDER 11 U.S.C. § 109(c)
Pursuant to 11 U.S.C. § 109(c), an entity may only be a debtor under Chapter 9 upon satisfaction of certain conditions. Palo Verde Healthcare District ("PVHD"), which operates the Palo Verde Hospital located in Blythe, California, is eligible as a Chapter 9 debtor as follows:
PVHD qualifies as a "municipality" as the term is defined under 11 U.S.C. § 101(40). PVHD is a special hospital district created under California Health & Safety Code § 32000 et seq., satisfying 11 U.S.C. § 109(c)(1).
PVHD is specifically authorized to be a Chapter 9 debtor by California Government Code § 53760 as a "local public entity" within the meaning of California Government Code § 53760.1(f), having declared a fiscal emergency and adopting a resolution by a majority vote of the governing board of PVHD itself, in a 3-1-1 vote, which resolution is attached hereto, satisfying 11 U.S.C. § 109(c)(2).
PVHD is insolvent as such term is defined in 11 U.S.C. § 101(32)(C) because it is unable to pay its debts as they become due, and is currently not paying its debts as they become due. Although PVHD has a sum of cash on hand, and is diligently seeking to cut non-essential costs and collect receivables which are due to it, it must prioritize the health and safety of its patients. PVHD only currently provides emergency services with seven available beds, and does not have any in-patient services. The majority of the hospital building is currently not operational. The PVHD board declared the current fiscal emergency and authorized and directed the filing of the Chapter 9 petition in order to preserve public health and the safety of PVHD patients and to remain in compliance, first and foremost, with the requirements of California Title 22 regulations over health and safety. The requirements of 11 U.S.C. § 109(c)(3) are therefore satisfied.
PVHD desires to effect a plan to adjust its debts, and believes that with a plan of adjustment, coupled with increased revenues (whether from public or private sources), it can return to solvent operations, satisfying 11 U.S.C. § 109(c)(4).
PVHD has been subjected to multiple demands for payment by creditors who may have actually received transfers subject to 11 U.S.C. § 547(c)(5)(D) and an attempt to negotiate with its various creditors is impracticable, especially in light of the cash flow and liquidity issues presented to PVHD, satisfying 11 U.S.C. § 109(c)(5).
The statements herein are non-exhaustive and further information will be provided to the Court, creditors, and parties in interest if the matter of eligibility is subject to challenge in the Bankruptcy Court.
Publication Dates
LYRK0390598