Oroville Hospital Files for Chapter 11 Bankruptcy to Seek Stability

Oroville Hospital and its parent organization, OroHealth, have filed for Chapter 11 bankruptcy relief, marking a significant step in the ongoing financial struggles of this key healthcare provider. The voluntary petitions were submitted on December 8, 2023, in the U.S. Bankruptcy Court for the Eastern District of California, under the oversight of presiding Judge Christopher M. Klein.

In a statement regarding the filing, Oroville Hospital expressed optimism, stating, “We believe this filing is an important step toward securing the hospital’s long-term future as a vital healthcare provider and employer in our community.” The hospital aims to facilitate a court-supervised transaction with a partner capable of investing in its operations to sustain its mission for the benefit of all stakeholders.

The news has prompted concern from local officials, including Mayor Dave Pittman, who highlighted the hospital’s role as one of the city’s largest employers. “When one of the city’s largest employers finds it necessary to take this path, the City Council and I are deeply concerned for the wellbeing of every employee whose job may be affected as well as the people who depend on the hospital for care,” Pittman remarked. He added, “The continued service of the hospital is of critical importance to the people of Oroville.”

The hospital, which has faced financial difficulties for several years, announced on November 14, 2023, its search for a partnership or sale to a larger healthcare organization. To date, no partner or buyer has been secured. Additionally, on October 1, 2023, Oroville Hospital received a notice of acceleration demanding immediate payment of nearly $200 million in principal and accrued interest on a bond issued in 2019. This bond, totaling $195.63 million, was intended to finance the construction of a new five-story tower that has yet to open.

Compounding the hospital’s challenges, in December 2024, it agreed to pay $10.25 million to resolve allegations of illegal kickbacks and false billing claims to Medicare and Medi-Cal. Furthermore, in March 2025, a lawsuit exceeding $16 million was filed by Modern-Sundt, the construction company behind the tower, for unpaid contractor fees.

Despite these setbacks, Oroville Hospital maintains that the bankruptcy filing will position it to focus on high-quality patient care and operational continuity. The hospital will remain open during the Chapter 11 process, assuring the community that patient care will not be affected. Additional financing has been secured to support ongoing operations, employee payments, and vendor obligations throughout the bankruptcy proceedings.

To navigate this complex situation, Oroville Hospital has engaged Cain Brothers, a division of KeyBanc Capital Markets, as its investment banking advisor. The law firm Hooper, Lundy & Bookman, P.C. will provide regulatory and transactional counsel, while Epiq Corporate Restructuring, LLC serves as the claims agent for the Chapter 11 case.

For further information about the bankruptcy filing, individuals can reach out via email at [email protected] or visit [Epiq’s case information page](https://dm.epiq11.com/case/orovillehospital/info).