NACOGDOCHES, Texas — Lion Star, the private company that operates the Nacogdoches Memorial Hospital, has filed for bankruptcy in federal court after the Nacogdoches County Hospital District voted to terminate its lease with the group last month.
According to a petition filed in U.S. bankruptcy court of the Northern District of Texas on Nov. 17, Lion Star owes anywhere between $10 million and $50 million to an estimated 200 to 999 creditors.
Another court document that details a list of the 20 largest claims shows Lion Star owes over $2.8 million to a clinical staffing company from Arkansas, over $1 million to an electronic health record company and more then $580,000 to a biomedical services group based in California. Other debts listed include electricity, telephone services and other services and recordkeeping.
This bankruptcy filing comes after the Nacogdoches County Hospital District board voted to terminate the 10-year lease agreement with Lion Star on Oct. 13. In the agreement, the district is serving as the landlord while Lion Star is the tenant.
According to the notice of termination, Lion Star is past due and has missed payments to various vendors and refused to meet financial obligations.
"On information and belief, there are numerous other vendors which have claims which have not been paid as they become due," the notice said.
In July 2021, Lion Star and hospital district signed the agreement set to last through July 2031 with an annual rent payment of $3.1 million. However, if Lion Star becomes insolvent or unable to pay its debts when they become due, that is a violation of the lease agreement, the termination notice stated.
The hospital district website states that on Nov. 10, Nacogdoches County Hospital District participated with Lion Star in a court ordered mediation in hopes of reaching an agreement regarding an orderly transition of the operations of the hospital. NCHD said an agreement was not reached.
"The district will continue its efforts to ensure that quality healthcare will be provided to the citizens of Nacogdoches County in a financially responsible manner without the cooperation of Lion Star," the website stated.
Lynn Lindsey, CEO of the Nacogdoches County Hospital District, said because of the bankruptcy case, the terminating of the lease is on pause as the matters are currently in the lawyers' hands. She said the board is willing and able to step back in to overseeing the hospital if that is needed.
If the agreement with Lion Star does get terminated, Lindsey said the hospital district would search for a trustworthy partner to replace Lion Star.
CBS19 reached out to Sean Fowler, CEO of Nacogdoches Memorial Hospital, and he has not responded. When called on Wednesday, Nov. 22, a worker in the hospital's administration office said at this time, administrators have no comment regarding the bankruptcy filing.