Recently, the Interfaith Medical Center, has decided to file Chapter 11 bankruptcy. The New York Times, on December 2, 2012, wrote that this Brooklyn hospital has had financial problems for decades. The hospital serves the Bedford-Stuyvesant and Crown Heights neighborhoods and is having a difficult time paying its employees.

Over the years, the hospital has relied on state aid. Recently, New York State Governor Andrew M. Cuomo created the Medicaid Redesign Team to study the organization of hospitals. This team noticed that Brooklyn Hospital was more financially stable than Interfaith Medical Center and Wycoff Heights Medical Center, so it recommended that the three hospitals merge.

This merger plan is more problematic than it sounds. While Interfaith plans to be under Chapter 11 bankruptcy protection, it wants financing from the Dormitory Authority. This group has $130 million of the hospital’s debt and will not grant Interfaith any financing if it does not merge with Brooklyn Hospital. Interfaith, which cannot afford medical malpractice insurance, would also like $20 million in state financing to help with costs while the hospital is under Chapter 11 bankruptcy restructuring protection. The problem is that Interfaith would like to get the state’s financing before it would choose to merge with Brooklyn Hospital because if they were to merge, Interfaith would be under Brooklyn Hospital’s control. In other words, the matter is complex because in order to get financing from the Dormitory Authority Interfaith would have to sign an agreement with Brooklyn Hospital that they would merge but if Interfaith did this, it would not be able to get financing from the state. It is hoped that this Catch-22 situation is resolved and that the hospital can continue to provide medical care.

At the law office of Jayson Lutzky, P.C., Mr. Lutzky uses his 29+ years of experience to help his clients through their legal journeys. If you are considering filing bankruptcy, talk to a lawyer who has helped thousands of satisfied clients. To set up a free initial in person consultation, call (800) 660-LAWYER/5529 or visit for more information.