Minnesota Home Care Agency Files Chapter 7 Bankruptcy, Cites State Funding Issues

After months of controversy regarding employee pay and a stoppage of state funding, Minnesota-based Crystal Care Healthcare Services requested a federal judge to convert its previous bankruptcy filing from Chapter 11 to Chapter 7, local KSTP reports.

The request on Wednesday means the Richfield, Minnesota-based home care agency will shutter its operations and will not pay its debts, including the money it owes to employees.  

The company’s conversion to Chapter 7 bankruptcy is the latest action from the embattled Crystal Care, which initially filed for Chapter 11 in September, months after employees reported their checks had bounced. 

Crystal Care’s owner, Sally Knutson, cited the Department of Human Services as the reason for filing for Chapter 7, which according to KSTP, had stopped funding the company in January of this year. 

The company received in the range of $7-9 million a year, according to court documents cited in the article. 

When asked why Knutson did not “stick out” the Chapter 11 filing to restructure the company’s debt and pay employees what it owed them, she said she “didn’t have control over it.”

Bankruptcy records show Crystal Care’s debt surpasses $5 million, while 749 workers filed wage claims totaling $1.3 million. 

In accordance with the Chapter 7 filing, the company will cease operating in March.  

Read the KTSP article.

Written by Jason Oliva