The financially struggling C.W. Williams Community Health Center on Wilkinson Boulevard – which primarily serves low-income patients – has filed for Chapter 11 bankruptcy protection in federal court.
Court records show the health center has liabilities of about $1.8 million to its 20 largest creditors. They include Certus Bank of Mauldin, S.C., owed $680,000; the Internal Revenue Service, owed $313,000; and Hermosa Construction Group of Atlanta, owed $188,000.
In a news release, C.W. Williams’ board Chairman Nelson Adesegha announced that the board voted unanimously to “seek voluntary petition for relief” in the U.S. bankruptcy court for the Western District of North Carolina. He said the decision became necessary because of the center’s “cumulative financial debt” and as the result of recent legal action against the center’s assets.
In an email to Mecklenburg County commissioners last week, County Manager Dena Diorio said she was notified by Leon Burton, the center’s executive director, that the bankruptcy filing was pending. Diorio said Burton told her that “two judgments were filed against them which resulted in a freeze on their bank account. Without access to their bank account they are unable to operate.”
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Contacted by the Observer, Burton said the health center remains open three days a week, but he referred other questions to Raleigh lawyer Robert Lewis. Lewis did not return a call from the paper Monday.
Adesegha said C.W. Williams “has every intent on continuing to provide primary health care services” to Mecklenburg residents. He said filing for bankruptcy “will allow the health center to continue operating under the protection of the court while reorganizing its operation and finances.”
C.W. Williams, which receives funding from the federal government and other sources, has provided medical care in Charlotte for more than 30 years. Since January, its staff has been cut by about half. In August, the satellite location on East Boulevard closed, and the Wilkinson clinic reduced its hours from five days a week.
Its latest audit for the fiscal year that ended March 31 identified internal control deficiencies and a negative net worth of $1.6 million. C.W. Williams is the only federally qualified health center in Mecklenburg and one of 32 in the state. In recent years, the health center has received a grant from commissioners for care of the homeless, but this year Diorio recommended against continuing that.
When contacted Monday, Martin Kramer, a spokesman for the federal Health Resources and Services Administration, said the federal agency was notified last week about the bankruptcy filing. He said HRSA funding, which makes up 20 percent of C.W. Williams’ budget, “remains in place.” He said the agency’s “main concern is that the health center be able to continue to provide primary care to their patient population.”
Coincidentally, Kramer said the federal agency is conducting a previously planned site visit this week. Results of that visit will be publicly available, but “it will take months for the report to be finalized.”
Kramer said “other health centers have gone through this process and come out of it stronger.” But if it becomes necessary, he said HRSA could announce a competition so that other providers could apply to provide health care for the C.W. Williams service area.
When a business is unable to pay its creditors, it can file for protection under either Chapter 7 or 11 of the U.S. bankruptcy code. Under Chapter 11, in most instances the debtor remains in control of its operations and reorganizes under court oversight. In contrast, Chapter 7 governs the process of liquidation, and a trustee sells assets to pay debts.
Researcher Maria David contributed.