Baltimore Mental Health and Addiction Clinic Files for Bankruptcy
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Baltimore Mental Health and Addiction Clinic Files for Bankruptcy

January 7, 2012


Baltimore Behavioral Health Inc., a mental health and addiction treatment center in Maryland, is filing for bankruptcy protection because it owes more than $5 million to various creditors, according to a Baltimore Sun report.

The treatment facility has more than $5.5 million in debt, but its bankruptcy petition reveals that its assets are worth less than $500,000. As a result, bankruptcy may have been the center’s only feasible option to regain its financial health.

Financial troubles have struck the medical treatment industry in recent years, as the recession reduced the number of potential clients and shrunk the available pot of state and federal grant money.

Treatment facilities like Baltimore Behavioral Health that focus on substance abuse and mental health treatment are stretched even further financially due to the delicate nature of their work.

Unfortunately for Baltimore Behavioral Health, discharging debts in bankruptcy will not be very easy, as a large amount of its debts are owed to the Internal Revenue Service.

Sources say the clinic owes the IRS roughly $4 million in unpaid payroll taxes, according to filings that were submitted by the government to the U.S. Bankruptcy Court for the District of Maryland.

In its defense, the clinic claims that its actual debt to the government is significantly smaller, although it will face a heavy burden in trying to prove this to the bankruptcy court.

Despite the likelihood that much of the tax debt will survive the bankruptcy, the clinic may still be able to shed a large amount of other debt.

According to sources, Baltimore Behavioral Health owes money to nearly two dozen non-government entities, including private companies and several individuals.

For example, the center owes nearly $1 million to a health consulting firm led by one of the clinic’s former executives, more than $40,000 to Baltimore Gas and Electric Co., and at least $20,000 to an attorney in Towson, Maryland.

If Baltimore Behavioral Health is able to discharge some or all of these debts, it may have more leverage to begin repaying its debts to the IRS. So while the clinic’s financial future remains cloudy, it still has some rays of hope.

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