Grand Forks Clinic Group Seeks $639,000 in Cash Collateral to Keep Operating
Grand Forks Clinic and six affiliated debtors seek authority to use approximately $639,000 in cash collateral to keep operating during the opening weeks of their North Dakota Chapter 11 cases. The October 19 motion requests interim spending authority through the end of the week beginning November 9, 2026, as the group pursues reorganization through continued operations. These are requested authorizations, not approved funding. Cash-collateral motion, ¶¶ 6, 25–31 and requested relief
The businesses filed on October 16, 2026. Owner Dr. Khaled Rabadi says unsuccessful restructuring negotiations with First Western Bank & Trust and the bank’s foreclosure and collection actions prompted the filings. His declaration describes an intended joint reorganization plan designed to preserve the businesses and repay creditors from continued operations. Rabadi declaration, ¶¶ 41 and 49–54
This account covers filings through October 22, 2026; it does not report the outcome of the scheduled October 23 hearing.
Sources (6)
- Cash-collateral motion, ¶¶ 6, 25–31 and requested reliefCourt filing (opens in a new tab)
- Rabadi declaration, ¶¶ 41 and 49–54Court filing (opens in a new tab)
- PetitionCourt filing (opens in a new tab)
- Employee-payment motion, ¶¶ 1 and 8–16Court filing (opens in a new tab)
- Joint-administration motion, ¶¶ 13–20Court filing (opens in a new tab)
- Expedited-hearing order, pp. 2–4Court filing (opens in a new tab)
Case record
- · Expedited First Day Hearings
- · Final Hearing Set On 10 Motion for Order Authorizing Debtors to Pay Accrued and Outstanding Prepetition Employee Compensation, Benefits, and Related Amounts. Final Hearing to be held on at Quentin N. Burdick U.S. Courthouse, Courtroom 3, 2nd Floor, 655 1st Ave. N., Fargo, ND 58102. Additional objections to this motion, if any, must be filed not later than . (sfh)
- · Withdrawal of Document (Text entry only)- The electronic filer will be responsible for informing all interested parties that are nonelectronic filers notice of this withdrawal and a certificate of service will be filed. Filed by U.S. Trustee United States Trustee ( related document(s)[3] Notice of Appearance). (Wencil, Sarah)
Public case facts. Searchable documents available. Full docket access requires Pro.
| Debtor(s) | Kidney and Hypertension Center, PLC d/b/a Grand Forks Clinic, and six affiliated debtors. Declaration |
| Court | U.S. Bankruptcy Court for the District of North Dakota. Petition |
| Case Number | 26-30886, the clinic’s case. Petition |
| Petition Date | October 16, 2026. Petition |
The affiliated debtors are The Medical Group, LLC; North Dakota Dialysis, LLC; Aurora Dialysis, LLC; Kidney Institute of North Dakota, LLC; KDJ Investment Group, LLC; and KDJ Properties, LLC. The group includes medical and dialysis operations as well as property-owning entities. KDJ Investment owns the clinic building. Rabadi declaration, ¶¶ 1–2 and 7–13
Cash use would support payroll and essential services
The cash-collateral motion separates the requested operating authority into two periods:
| Requested authority | Operating period | Approximate amount |
|---|---|---|
| Interim | October 16, 2026, through the end of the week beginning November 9, 2026 | $639,000 |
| Final | Week beginning November 16, 2026, through the end of the week beginning January 11, 2027 | $1,320,000 |
Both amounts are requests covering the debtor group. The proposed spending would pay wages, benefits, payroll taxes, insurance, critical vendors, utilities and other operating expenses. The debtors project that collections from continued operations would support their postpetition expenses. Cash-collateral motion, ¶¶ 25–31 and requested relief
In exchange for using cash subject to asserted lender liens, the debtors propose replacement liens to the extent of cash collateral used, continued insurance coverage, and reporting and inspection rights. Their position is that continued operations will replenish collateral and preserve business value. That remains the debtors’ adequate-protection proposal and projection. Cash-collateral motion, ¶¶ 6, 32–33 and 38–41
A separate employee motion reports 44 employees and seeks authority to pay approximately $50,000 in unpaid prepetition payroll, alongside other requested employee-related relief. The motion ties payment to retaining the workforce needed to operate the businesses. Employee-payment motion, ¶¶ 1 and 8–16
Clinic estimates and group debt have different scopes
The clinic’s petition estimates assets of $100,001–$500,000, liabilities of $1,000,001–$10 million, and 50–99 creditors. It also checks the box indicating that no funds would be available to unsecured creditors after administrative expenses. These are the clinic’s petition estimates; they do not establish a recovery percentage under a confirmed plan. Clinic petition, statistical and administrative information
Rabadi’s declaration provides a broader picture of group obligations. It estimates approximately $11,533,285 owed to prepetition secured lenders, including approximately $7,242,289 owed to First Western Bank & Trust. The bank’s asserted collateral includes clinic assets and equipment, with mortgages on property held by affiliated entities. These group figures should not be treated as the clinic’s stand-alone liabilities or added to its petition range. Rabadi declaration, ¶¶ 18–32
The distinction also matters to case administration. The debtors request joint administration under the clinic’s case number, but their motion expressly seeks administrative coordination rather than substantive consolidation of the estates. Joint-administration motion, ¶¶ 13–20
Rabadi attributes the filing to liquidity strain and foreclosure pressure
Rabadi describes financial pressure despite growth in patient visits and investment in clinical services. He points to the cost of the new Grand Forks facility, competition, inflation and rising personnel expenses. His declaration also says the 2024 Change Healthcare cyberattack delayed insurance payments, straining businesses that depended heavily on patient collections for working capital. Rabadi declaration, ¶¶ 39–45
According to Rabadi, the group turned to merchant cash advances and private loans after sufficient additional financing was unavailable, and repayment obligations further reduced liquidity. Dialysis operations separately faced declining patient volumes and the cost of temporary staffing. He says negotiations with First Western failed to produce an acceptable restructuring agreement, followed by foreclosure and collection litigation. These are management’s explanations for the filing. Rabadi declaration, ¶¶ 46–53
The scheduling order sets hearings, not operating approval
Judge Shon Hastings’s October 20 order scheduled a preliminary hearing on the cash-collateral, employee-payment, bank-account and joint-administration motions for October 23, 2026, at 9 a.m. Central. The order grants expedited consideration and says interim relief will be limited to what is necessary to avoid immediate and irreparable harm pending a final hearing. It does not itself authorize the requested spending. Expedited-hearing order, pp. 2–4
The same order scheduled final consideration of cash collateral, bank-account continuity and joint administration for November 5, 2026, at 1 p.m. Central, and the employee-payment motion for November 17, 2026, at 9 a.m. Central, subject to the order’s provisions permitting approval and cancellation of hearings if no objections are received. The immediate unresolved issue is whether, and on what terms, the court will authorize operating cash use under the debtors’ proposed protections for lenders. Expedited-hearing order, pp. 2–3
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. See the disclaimer.