The Montgomery City Council declined to guarantee a loan for Jackson Hospital on Friday, which the institution requires to receive $20.5 million from its bondholders to keep its doors open.

Jackson Hospital has undertaken significant restructuring in recent months after several financial issues plagued the Montgomery institution.  

Jackson defaulted on a $60 million bond payment in September 2024 and has missed multiple payments. That same month, Allen Wilen, a partner with EisnerAmper Advisory Group, was appointed chief restructuring officer.

The financial woes led to CEO Joe Riley and COO Michael James resignations in November 2024. Ronald Dreskin, who was previously brought in to support the restructuring, has been operating as interim CEO since late last year.

During Friday's meeting, council members acknowledged the hospital's plight and importance to the city while expressing displeasure at the lack of information members needed to approve the guarantee.

Instead of voting on a resolution to guarantee the loan, Councilman Andrew Szymanski proposed a substitute resolution calling for the city to negotiate a plan with the hospital while the council received specific financial information from hospital officials.

Allen Wilen, Jackson's chief restructuring officer, gave a grim prognostication of the hospital's immediate future without the loan guarantee, with an impending payroll for its roughly 2,100 employees.

"We are in a position where we don't have time to waste for two weeks; even two days may be difficult," Wilen said. "I am facing a payroll next week for the employees of the hospital with a payroll that we may not be able to make unless we have this guarantee in place."

Wilen emphasized that the city was not asking for any direct money from the city; it only needed to guarantee the loan, which would make the city responsible for the balance should Jackson default.

Wilen also claimed the city would be in first position on the bond, meaning its $20.5 million note would be paid off first in a liquidation process. With the hospital's assets exceeding $100 million, Wilen claimed the likelihood of the city losing money was near zero.

Despite Wilen's assurances, Mayor Steven Reed and several council members expressed uncertainty. They questioned the legal certainty of the city's first position on the loan since hospital attorneys had not presented a finalized document. They also questioned whether this was a short-term solution without appropriate financial adjustments at the hospital, expressing fear that the council would face a similar resolution in the future. The council also seemed perturbed at the Montgomery County Commission and state lawmakers for declining to aid the hospital, as reported by Wilen.

 "Seeing this still in draft form in my agenda packet today just makes me wonder, before we authorize this amount of money, that we know that everything that's being sent to us is right," Szymanski said. "And if it is, great. And if it is, and the state and the county and other players won't help us, then shame on them, and we'll go forward anyway. It's not resistance to helping the hospital that's giving me pause, it's concern that we have not had time to do our due diligence as the nine people that have been elected to represent the people of Montgomery."

Several council members, namely Ed Grimes, Glenn Pruitt, and Charles Jinright, seemingly didn't want to delay the vote at all.

After much deliberation and public comments from several hospital employees, the council voted to approve Szymanski's amended resolution.

The council members tentatively mentioned Tuesday as a date to vote on the loan guarantee after members receive the desired clarifications and documentation.

To connect with the author of this story or to comment, email craig.monger@1819news.com.

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