Pacifica Hospital of the Valley in Sun Valley, California, filed for Chapter 11 bankruptcy protection on July 4, according to a petition lodged in the U.S. Bankruptcy Court for the District of Delaware.
Bankruptcy filing details and immediate concerns
The filing lists assets between $50 million and $100 million and liabilities ranging from $100 million to $500 million, with an estimated 1,000 to 5,000 creditors. The case, identified as Case No. 26‑11060, is being overseen by the U.S. Trustee’s Office, which is inviting eligible creditors to serve on an official committee of unsecured creditors.
Pacifica’s declaration notes that the organization holds roughly $240,798 in unrestricted cash and does not plan to seek debtor‑in‑possession financing at this stage. Instead, the hospital asked the court for permission to use cash subject to creditor liens to cover payroll, vendor payments, and other operating expenses. An interim order allowing use of cash collateral was entered.
The court set a final hearing for Aug. 7.
The hospital operates a 231‑bed general acute‑care facility with a basic emergency department, as listed by the California Department of Health Care Access and Information. It also runs a separately licensed 98‑bed subacute skilled‑nursing unit, according to court records.
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Financial pressures and legal disputes
President and CEO Precious Mayes indicated that Pacifica employs about 697 staff members and treats more than 50,000 emergency patients each year. Approximately 81 % of those patients are covered by Medi‑Cal, California’s Medicaid program.
The bankruptcy filing follows a dispute over a $35 million loan issued through the federal Main Street Lending Program in December 2020. Axios Capital Solutions, which claims to have acquired the loan from First Western Trust Bank, alleges it is owed at least $50.9 million, including interest, penalties, and other charges. Pacifica contests the loan’s transfer validity and questions whether the transaction complied with program restrictions.
A Colorado court denied Axios’s request for summary judgment on June 26, leaving the loan‑transfer issue unresolved. The lender subsequently sought a receiver to take control of the hospital, with a hearing scheduled for July 8, four days after the Chapter 11 filing. In its limited objection, the creditor asserts a first‑priority lien on substantially all of Pacifica’s assets and has questioned whether the institution had the corporate authority to file for bankruptcy.
Beyond the loan dispute, the facility attributes its financial strain to pandemic‑related expenses, rising labor costs, delayed or reduced government reimbursements, and a 2024 cyberattack on Change Healthcare that disrupted billing and collections. It also incurred roughly $9 million in penalties through June for not completing required seismic upgrades, which caused the loss of access to 38 skilled‑nursing beds.
Pacifica is not seeking new financing, but it has asked the court to allow the use of existing cash collateral for essential operations. The request focuses on maintaining staff payroll and vendor relationships while the broader dispute over the Main Street loan proceeds through the courts.