• Montgomery’s City Council approved a resolution to financially back Jackson Hospital, but Mayor Steven Reed vetoed it.
• The mayor has proposed an amended plan where the county would hold the majority stake in the hospital’s funding.
• Jackson Hospital’s financial issues began over a year ago when it defaulted on $60 million in debt.
• A federal bankruptcy judge approved a loan extension expected to keep the hospital open into the holidays.

In light of Jackson Hospital being officially “out of money” and under threat of closure, Montgomery’s City Council voted unanimously Oct. 7 in favor of a resolution to back the hospital financially. Montgomery Mayor Steven Reed vetoed that resolution Oct. 16 but suggested a different path to support for the hospital with backing from the city.

Though the statement from the mayor explaining the decision said that the city “remains committed to supporting Jackson Hospital and ensuring that quality healthcare remains accessible,” Reed has proposed for the terms of the funding resolution to be amended.

Under the mayor’s proposition, the county would have the “majority stake” in Jackson’s funding, given that the Code of Alabama designates issues with hospitals and indigent care as the county’s responsibility. Reed also noted that the amendment to the funding agreement “protects residents and reflects a fair share of responsibility.”

Reed’s statement also summarized the caveats to the city’s proposed amendment to the funding agreement. It reads as follows:

“Our position is straightforward:

Reed’s statement says that the city has been in communication with the governor’s office but hasn’t seen written commitments from the state regarding the hospital’s situation.

“Our message is clear: We are not withdrawing support from Jackson Hospital,” the statement reads. “We are insisting on accountability, fairness, and partnership — for the good of our residents and the integrity of public resources.”

The original resolution the city council approved didn’t list tangible dollar amounts but did show interest in helping Jackson stay afloat.

Beyond this, on Oct. 14, a federal bankruptcy judge approved a Debtor in Possession loan for the hospital, a measure that gives bankrupt entities cash to borrow in order to pursue financial restructuring efforts, as well as support their day-to-day operations.

The extension of the DIP loan from $22 million to $35 million is expected to keep the hospital open into the holidays, hospital officials stated.

Why is Jackson Hospital in this situation?

Jackson Hospital’s financial dire straits started a little over a year ago. Last September, the hospital defaulted on $60 million in debt, which led to credit rating agency S&P Global Ratings lowering the hospital’s rating to “D,” indicating default. Additionally, CreditWatch removed the hospital’s rating entirely.

Their plan to get back on track was publicly introduced in the month following the initial news of the default and included introducing new CEO Ronald Dreskin and Chief Restructuring Officer Allen Wilen to rework their financing and daily operations in a way that is more efficient.

In January 2025, Dreskin and Wilen lead a rally for support for the hospital, where signs stating “SAVE OUR JOBS” made it clear the situation at the hospital was more dire than it appeared previously.

Dreskin and Wilen and said their plan to move forward with restructuring involved asking the City of Montgomery to give them a guarantee on a $20.5 million loan that they “need to take until a final solution is made, which would be a permanent financial restructuring.”

Dreskin and Wilen said they “are not asking for a dollar of funds from the City of Montgomery” and that this loan they wanted the city to guarantee was just “to get through the next period of time.” Wilen said the likelihood of it ever being called was “very, very, very minute.”

Wilen made it clear at the Jan. 31 Montgomery City Council meeting that the hospital’s ability to remain open — even its ability to make its payroll for its employees that week — hinged on this loan.

The city council was not keen on accepting the conditions that Wilen laid out without further research and consultation with an attorney. Though there was outcry from the public and elected officials, Jackson Hospital filed for Chapter 11 bankruptcy proceedings in February.

Since filing for bankruptcy, the hospital has laid relatively low, occasionally launching public health initiatives and introducing a new hospital amenity for emergency personnel.

At the end of September, the officials hat work with the hospital said that Jackson is “out of money,” and would be forced to close at the end of October if something didn’t change for the hospital.