SPRINGFIELD — Springfield Medical Care Systems will host a new series of community meetings to discuss the organization’s recent bankruptcy filing and what that process means going forward. The organization will hold the first meeting on July 8 in Springfield and finish in Charlestown on July 18, and include meetings in Rockingham, Ludlow and Londonderry.

“The company is working to transition into Chapter 11 and in discussion with creditors about routine affairs as it does so,” said Springfield Hospital’s attorney Andrew Helman from the Maine-based firm Murray, Plumb and Murray.

Chapter 11 bankruptcy differs from Chapter 7, in which a company liquidates its assets and shuts down, Helman said. The purpose of Chapter 11 is for a company to restructure its financial operation to become solvent, which it can pursue through by either selling assets or reorganizing its system to reduce costs.

Springfield Hospital Interim CEO Michael Halstead said during public meetings last month that the hospital has approximately $1 million in bank holdings but needed to present a cost-reduction plan to the bank to access those investments. Since Quorum Health Resources took over Springfield Hospital in January, the hospital has reduced staff by 30 people, passed across-the-board pay cuts for management and hourly staff and replaced the hospital’s birthing center with a partnership with Brattleboro Memorial Hospital. Halstead said the hospital plans to reduce annual spending by $6.5 million. During the two years prior to Halstead’s arrival, Springfield Hospital accumulated a debt of $14 million.

The timetable for the bankruptcy process can be difficult to predict, Helman said. The process can be as short as six months but in most cases is significantly longer.

According to the federal government website uscourts.gov, the Chapter 11 process begins with the debtor filing a petition with the bankruptcy court. The debtor must also file the organization’s assets and liabilities; current income and expenditures; contracts and unexpired leases; and a statement of financial affairs. The debtor must also pay a $1,167 case filing fee and a $550 miscellaneous administrative fee.

The debtor must also file a disclosure statement and a plan of reorganization, according to the federal website. The statement must provide sufficient information about the organization’s assets, liabilities and business affairs to allow a creditor to make an informed judgement about the debtor’s plan to reorganize.

Generally, a written disclosure statement and a plan of reorganization must be filed with the court. The disclosure statement is a document that must contain information concerning the assets, liabilities, and business affairs of the debtor sufficient to enable a creditor to make an informed judgment about the debtor’s plan of reorganization. The organization’s plan must address how the organization will treat each group of claims.

Creditors whose claims will be modified or pay them less under the plan vote on the plan by ballot, according to uscourts.gov. If the creditors approve the plan the bankruptcy court will conduct a confirmation hearing to decide whether or not to confirm the plan.

Chapter 11 bankruptcy bears similarities to Chapter 13 bankruptcy, but Chapter 13 is typically for personal filings, Helman explained.

According to the petition filed by Springfield Hospital on June 26, the hospital owes over $6 million of its debt to 20 creditors with the largest unsecured claims. These creditors include the State of Vermont for Medicare or Medicaid overpayment ($2 million), the Internal Revenue Services for taxes ($555,510), and ProAct Inc., an employee management service provider ($642,307).

Springfield Medical Care Systems filed a separate petition for bankruptcy on June 26, which lists debts of the partnering health centers not included in Springfield Hospital’s filing. Care Systems’ debt comprises a relatively smaller portion of the total; it owes about $2.1 million to 20 creditors with the largest unsecured claims.

According to Springfield Medical Care Systems’ filing, the network owes the Town of Charlestown $14,362.95 in property taxes for the Charlestown Health Center, one of the network’s health facilities. Though it is common for companies in Chapter 11 to have creditors in more than one state, Springfield Medical Care System’s status as a health-care provider may potentially invoke federal or state regulations in the bankruptcy process that other bankruptcies would not.

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