The Bellevue Hospital: 71-Day Restructuring Ends in Firelands Acquisition

In 1914, a group of citizens in Bellevue, Ohio envisioned a public hospital for their community. Three years later, on March 6, 1917, The Bellevue Hospital opened its doors, beginning more than a century of service to the residents of Erie County and surrounding areas. By 2025, the 50-bed community hospital faced the same pressures threatening 756 rural U.S. hospitals—rising operational costs, limited access to capital, and reimbursement rates that fail to keep pace with expenses. On February 5, 2025, The Bellevue Hospital filed for chapter 11 protection in the Northern District of Ohio, entering bankruptcy with a prenegotiated restructuring that contemplated Firelands Health as plan sponsor and sole owner.

The case proceeded on a 71-day confirmation timeline. The debtor assumed a Restructuring Support Agreement on the fifth day of the case, and the agreement was executed before the petition date. Just 71 days after filing, the court confirmed the First Amended Chapter 11 Plan of Reorganization, and on May 16, 2025, the plan became effective with Firelands Health completing its acquisition of the hospital. Firelands committed approximately $15 million in capital expenditures over five years, retired more than $17 million in bank debt, and agreed to cover nearly $6.5 million in other outstanding liabilities.

The case also included a contested administrative expense claim. Fisher-Titus Health, a competing regional healthcare system based in nearby Norwalk, filed the claim, which drew objections from both Firelands and the reorganized debtor. The dispute was referred to mediation in October 2025 and remained pending as of December 2025.

Debtor(s)	The Bellevue Hospital
Court	U.S. Bankruptcy Court, Northern District of Ohio
Petition Date	February 5, 2025
Plan Type	First Amended Chapter 11 Plan of Reorganization
Confirmation Date	April 17, 2025 (71 days from petition)
Effective Date	May 16, 2025
Bed Count	50 beds
Facility Size	129,000 sq ft on 109 acres
DIP Facility	$1.5 million (Firelands Regional Health System)
Plan Sponsor	Firelands Health (Sandusky, Ohio)
Plan Sponsor Commitments	$15M capex over 5 years; $17M debt retirement; $6.5M other liabilities

Company Background

The Bellevue Hospital's history dates to 1914, when community leaders in Bellevue, Ohio envisioned a public hospital. The hospital formally opened in March 1917 and has provided local healthcare services since then. In 1978, the institution became the first small and rural hospital in Ohio to establish an inpatient alcohol detoxification and rehabilitation program.

The current facility dates to 2005, when the hospital relocated to a new 129,000-square-foot building situated on 109 acres. The new campus accepted its first patients on March 13 of that year, replacing older infrastructure. In 2017, The Bellevue Hospital celebrated its centennial, marking 100 years of operations.

As a locally owned, not-for-profit institution, the hospital operated 50 beds and provided a range of acute care and outpatient services. The organization stated that it offers advanced technology and medical treatment, and it faced the financial pressures common to rural facilities before filing chapter 11 in 2025.

Path to Distress

The financial challenges facing The Bellevue Hospital were not unique to this particular institution. Rather, the hospital's distress reflected structural pressures affecting rural and independent hospitals across the United States. Becker's Hospital Review identified several factors common to such facilities: rising operational costs, constrained access to capital, increasing regulatory complexity, and persistent funding limitations.

These pressures coincide with elevated closure risk for rural healthcare access. Analysis by Chartis indicates that 756 rural U.S. hospitals are at risk of closure due to financial problems, with more than 40 percent of those facilities facing immediate closure risk. In over half of all states, at least 25 percent of rural hospitals face financial risk. Ten states have 50 percent or more of their rural hospitals in this category. Between January 2005 and May 2024, 219 rural hospitals either closed entirely or converted to facilities without inpatient services, representing a net reduction of healthcare facilities in communities that often have few alternatives.

The period from 2019 through 2023 saw 117 acute care hospital closures against only 68 openings—a net reduction of 49 hospitals nationwide. While closures among rural facilities slowed to four in 2024, Chartis reported continued financial challenges for independent community hospitals operating without the scale advantages of larger health systems.

Cost and reimbursement pressures. Healthcare bankruptcies in 2024 declined to 57, down from 79 in 2023, according to Medical Economics. The figure nonetheless exceeded the pre-pandemic annual average of 42 filings, suggesting that elevated distress persists even as headline numbers improve. Hospital bankruptcies specifically fell from 12 in 2023 to five in 2024.

Industry analysis identifies several drivers of continuing distress. Labor and supply cost inflation has squeezed margins across the sector, with hospital wage growth running at approximately 4 percent in 2024 while workforce shortages persist. Reimbursement increases have failed to keep pace with expense growth, leaving hospitals structurally underfunded. Medicare Advantage plans, in particular, have emerged as a source of financial strain, with increased claim denials reducing cash inflows at precisely the time costs continue to rise.

For a 50-bed community hospital like Bellevue, these pressures align with those described for rural and independent hospitals. The restructuring that began in February 2025 included a planned acquisition by Firelands Health.

Chapter 11 Filing and DIP Financing

The Bellevue Hospital filed its chapter 11 petition on February 5, 2025, in the U.S. Bankruptcy Court for the Northern District of Ohio. The filing initiated a restructuring process that included a Restructuring Support Agreement executed before the petition date. First Day Declarations from Sara K. Brokaw and Darrell M. Lentz, the hospital's interim chief financial officer from HL4 Consulting, LLC, established the factual predicate for the requested relief and explained the circumstances leading to the filing.

The debtor's first day motions addressed the typical operational necessities for a healthcare provider in bankruptcy: maintenance of bank accounts, payment of trust fund taxes, continued employee wages and benefits, processing of patient and insurance refunds, adequate assurance to utility providers, and authorization to pay critical vendors essential to uninterrupted patient care. The court entered interim orders on February 11, 2025, permitting the hospital to continue operations while the restructuring proceeded.

DIP financing structure. Firelands Regional Health System, a neighboring healthcare organization based in Sandusky, Ohio, provided the postpetition financing necessary to fund operations through the bankruptcy process. The DIP facility totaled up to $1.5 million, with proceeds designated for ongoing operations and payment of professional fees incurred during the restructuring.

The court approved the DIP financing on an interim basis on February 11, 2025, just six days after the petition date. Final DIP authority followed on February 26, 2025, with a stipulated amendment to the DIP order entered on April 29, 2025, after confirmation. Firelands served as both DIP lender and plan sponsor.

The Jackson Hospital & Clinic case in Alabama followed a similar pattern, with the parent company providing DIP financing that enabled the hospital to continue serving its community during chapter 11.

Restructuring Support Agreement

The case included a Restructuring Support Agreement executed before the bankruptcy filing. RSAs are legal contracts between a debtor company and certain key creditors or stakeholders that establish agreed-upon restructuring terms. Their primary purpose is to reduce the uncertainty, cost, and duration of chapter 11 cases by locking in support for a particular transaction structure before the petition is filed.

RSAs obligate the signing parties to support specific restructuring terms that will be incorporated into the debtor's plan of reorganization. By obtaining these commitments prepetition, debtors can seek confirmation on shorter timelines than cases negotiated after filing.

RSAs are now common in large chapter 11 cases, appearing in nearly half of all significant filings. For creditors, RSAs provide certainty regarding their expected recoveries and, often, protections against the debtor pursuing alternative transactions. For debtors, RSAs provide a defined path to confirmation.

Day 5 RSA assumption. The Bellevue Hospital filed its motion to assume the RSA on February 10, 2025—just five days after the petition date. The debtor simultaneously filed a motion to shorten the time for notice and hearing on the assumption motion, and the court granted that request the following day.

The RSA established Firelands Health as the plan sponsor and defined the member substitution agreement through which Firelands would become the sole owner of the hospital. Under this structure, the existing nonprofit governance would be replaced with Firelands as the sole corporate member, giving Firelands complete control over the reorganized hospital while maintaining its not-for-profit status.

Plan Confirmation

The debtor filed its original Plan and Disclosure Statement on February 28, 2025, just 23 days after the petition date. The RSA set the key terms incorporated into the plan documentation.

The debtor had filed its confirmation procedures motion on February 11, 2025, and the court entered the corresponding order on February 21. A confirmation hearing setting order followed on March 7. On April 15, 2025, the debtor filed a First Amended Plan Modification addressing issues raised during the solicitation process. Two days later, on April 17, 2025, the court entered the Confirmation Order—exactly 71 days after the chapter 11 filing.

Plan terms and Firelands commitments. The confirmed plan implemented the member substitution agreement, with Firelands Health becoming the sole owner of The Bellevue Hospital. Local reporting detailed Firelands's commitments: approximately $15 million in capital expenditures over five years, retirement of more than $17 million in bank debt, and coverage of nearly $6.5 million in other outstanding liabilities and payables.

The commitments included capital expenditures and balance-sheet relief through debt retirement and liability coverage.

Emergence and acquisition completion. The plan became effective on May 16, 2025, and Firelands announced completion of the acquisition the following day. Firelands characterized the combination as ensuring the local community's continued access to high-quality care. The 50-bed facility continued operating as The Bellevue Hospital, now as part of the Firelands Health system.

After the effective date, Firelands became the sole owner of The Bellevue Hospital and the facility continued operating under the same name.

Patient Care Ombudsman

Healthcare bankruptcy cases involve unique considerations not present in typical corporate restructurings. Section 333 of the Bankruptcy Code addresses these concerns by mandating that courts consider the appointment of a patient care ombudsman in cases involving healthcare business debtors. If a debtor indicates in its bankruptcy petition that the case involves a healthcare business, the court must order appointment of a PCO within 30 days unless it determines that such appointment is not necessary to protect patients.

The ombudsman's role is to monitor the quality of patient care provided by the debtor and to report to the court every 60 days.

Federal Rules of Bankruptcy Procedure 2007.2 provides that the appointment requirement does not apply if a motion establishes that an ombudsman is not necessary for patient protection. Courts have recognized that in some circumstances—particularly small business cases where the expense of a PCO would be disproportionate to any benefit—the appointment may be waived.

PCO appointment and fees. In The Bellevue Hospital case, the court set a deadline for addressing PCO appointment on February 5, 2025, the petition date. The debtor subsequently filed a motion arguing that a PCO was unnecessary under the circumstances. Nevertheless, Deborah L. Fish was appointed to serve as Patient Care Ombudsman.

Fish filed her final fee application on June 6, 2025, and the court approved fees of $10,920 on June 30, 2025.

Key Employee Incentive Plan

Retaining critical personnel during a bankruptcy restructuring presents challenges for any debtor, including healthcare providers. Doctors, nurses, and other clinical staff are essential to continued operations, and administrative and financial professionals are needed to execute the restructuring.

Key Employee Incentive Plans provide a mechanism for addressing these retention risks. Unlike Key Employee Retention Plans (KERPs), which compensate employees simply for remaining with the company, KEIPs tie payments to specific performance metrics. The distinction matters because the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) imposed strict limitations on payments to retain key employees, while leaving more room for legitimate performance-based incentive programs.

KEIPs, by contrast, must be tied to measurable performance goals.

KEIP approval in The Bellevue Hospital case. The debtor filed its KEIP motion on February 14, 2025, nine days after the petition date. The court entered the KEIP approval order on March 4, 2025.

The specific terms of the KEIP—including which employees were covered and what performance metrics applied—were set forth in the motion and order.

Post-Confirmation: Fisher-Titus Dispute

A contested matter emerged after confirmation, when Fisher-Titus Health filed an administrative expense claim that both the reorganized debtor and Firelands challenged.

Fisher-Titus operates from Norwalk, Ohio, serving Huron County and north central Ohio. The system includes Fisher-Titus Medical Center, a 99-bed acute care hospital, along with Norwalk Memorial Home (a 69-bed skilled nursing facility) and Carriage House (a 48-unit assisted living facility). With approximately 1,300 employees and more than 200 active medical staff members across 35 specialties, Fisher-Titus is an independent healthcare system in the region. The Chartis Center for Rural Health named it among the Top 100 Rural & Community Hospitals for 2025.

The system traces its origins to 1911, when the Norwalk Hospital Association was founded. Local leaders built a centralized hospital facility in 1916, just one year before Bellevue opened its own doors. Fisher-Titus invested $28.7 million in a new Patient Pavilion in 2005—the same year Bellevue moved to its current campus. In 2010, Fisher-Titus became the nation's first all-digital "smart" community hospital.

Administrative expense claim timeline. Fisher-Titus filed its administrative expense application on June 13, 2025, approximately two months after the Confirmation Order. The nature of the claim—and the basis for administrative expense priority—was set forth in the application. Under section 503 of the Bankruptcy Code, administrative expenses are entitled to priority payment and include costs and expenses of preserving the estate incurred after the bankruptcy filing.

Firelands Regional Health System filed an objection on July 15, 2025. The reorganized debtor filed its own objection the following day.

A stipulation regarding discovery followed on July 21, 2025. Status conferences and procedural motions continued through the fall. On October 23, 2025, the court referred the matter to mediation.

Regional context. Firelands is based in Sandusky, and Fisher-Titus is based in Norwalk and serves Huron County and north central Ohio. The administrative expense claim remains pending as of December 2025.

The contested Fisher-Titus claim appears in the docket as the second most-referenced document, trailing only the original chapter 11 petition. Status conferences continued into December 2025, with the mediation process ongoing.

Key Professionals

Debtor's counsel. Allen Stovall Neuman & Ashton LLP served as bankruptcy counsel to The Bellevue Hospital. The Columbus-based firm, founded in 2003, maintains a bankruptcy-focused practice with approximately ten lawyers. Chambers USA recognized Allen Stovall as Band 3 for Bankruptcy/Restructuring in Ohio in its 2025 guide, making it the only Ohio-based firm outside of large multi-city practices to receive Chambers distinction in the bankruptcy category. The firm's attorneys collectively hold more than 100 years of bankruptcy experience and have represented both debtors and creditors across a range of restructuring matters.

Investment banker. Juniper Advisory, LLC served as investment banker. The Chicago-based firm was founded in 2006 by investment bankers James Burgdorfer and David Gordon, with team members drawn from larger Wall Street institutions including Citigroup, J.P. Morgan, Piper Jaffray, and Morgan Stanley. Juniper focuses exclusively on non-profit hospital mergers and acquisitions, with particular activity advising government-owned, 501(c)(3), faith-based, and academic medical centers. Over 35 years of combined leadership, the firm has completed more than 250 assignments.

Juniper's case announcement described the Firelands transaction as a new chapter for rural care and cited preservation of community healthcare access through system affiliation.

Claims agent. Kroll Restructuring Administration LLC, formerly known as Prime Clerk, handled claims administration and related services. Kroll's platform provides end-to-end restructuring administration including claims processing, creditor notifications, plan solicitation, and vote tabulation. The firm operates dedicated print-production facilities for bankruptcy legal noticing and deploys cloud-native claims-management software with e-balloting capabilities.

Professional Fee Awards

Final fee applications awarded $151,789 in attorney fees for John F. Kostelnik and $10,920 for the patient care ombudsman.

Key Creditors

Firelands served as DIP lender and plan sponsor. The secured lenders—Bank of New York and Fifth Third Bank—held prepetition debt that Firelands committed to retire as part of its plan sponsor obligations. The $17 million debt retirement covered these obligations.

Government creditors included the U.S. Department of Health and Human Services and the U.S. Environmental Protection Agency.

Key Timeline

Frequently Asked Questions

What is The Bellevue Hospital and why did it file for bankruptcy?

The Bellevue Hospital is a 50-bed community hospital in Bellevue, Ohio that has served the community since opening in 1917. It filed chapter 11 in February 2025 due to rising operational costs, capital access constraints, and other pressures common to rural and independent hospitals. The filing enabled a prenegotiated restructuring with Firelands Health as plan sponsor.

Who acquired The Bellevue Hospital through the bankruptcy?

Firelands Health, a Sandusky, Ohio-based health system, acquired The Bellevue Hospital through a member substitution agreement confirmed in the chapter 11 plan. Firelands served as both DIP lender during the case and plan sponsor for the reorganization, becoming the hospital's sole owner upon emergence.

What did Firelands Health commit to invest?

Firelands committed approximately $15 million in capital expenditures over five years, retired more than $17 million in bank debt, and agreed to cover nearly $6.5 million in other outstanding liabilities and payables.

How long did the bankruptcy process take?

The case confirmed in 71 days, from the February 5, 2025 petition date to the April 17, 2025 Confirmation Order. The plan became effective on May 16, 2025. The Restructuring Support Agreement was assumed on Day 5 of the case.

What is a Restructuring Support Agreement and why was it significant here?

A Restructuring Support Agreement is a contract between a debtor and key stakeholders that locks in support for specific restructuring terms before a bankruptcy filing. Bellevue's RSA was assumed on Day 5 of the case, indicating that terms had been substantially negotiated prepetition. The plan was confirmed 71 days after the petition date.

What is the Fisher-Titus dispute about?

Fisher-Titus Health, a competing regional healthcare system based in Norwalk, Ohio, filed a contested administrative expense claim in June 2025. Both Firelands and the reorganized debtor objected to the claim. The matter was referred to mediation in October 2025 and remains pending as of December 2025.

What is a Patient Care Ombudsman and was one appointed?

Section 333 of the Bankruptcy Code requires courts to consider appointing a Patient Care Ombudsman in healthcare bankruptcy cases to monitor patient care quality. Deborah L. Fish was appointed as PCO in The Bellevue Hospital case and received $10,920 in fees for her services.

Why was a Key Employee Incentive Plan approved?

The KEIP was approved to retain critical hospital personnel during the restructuring uncertainty. Unlike retention plans that pay employees simply for staying, KEIPs tie payments to performance metrics, making them permissible under BAPCPA's limitations on insider retention payments.

What is the broader context for rural hospital closures?

The Bellevue Hospital's distress reflects broader pressures on rural healthcare. Approximately 756 rural U.S. hospitals face closure risk, with more than 40 percent at immediate risk. From 2005 through 2024, 219 rural hospitals closed or converted to facilities without inpatient services. The restructuring-and-acquisition path followed by Bellevue is one approach used to maintain local hospital operations.

Is The Bellevue Hospital still operating?

Yes. The hospital continues operations under Firelands Health ownership. Post-effective date administration, including resolution of the Fisher-Titus dispute, continues as of December 2025.

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For additional analysis of healthcare restructurings and rural hospital transactions, explore more coverage on the ElevenFlo bankruptcy blog.