HUNTSVILLE, Ala. — The following is a media release issued Friday night by Heart of the Valley YMCA Interim CEO Jeff Collen:
“Today, the Huntsville YMCA, also known as the Heart of the Valley YMCA, is seeking Chapter 11 protection in U.S. Bankruptcy Court for the Northern District of Alabama in Huntsville. This was an extremely difficult decision for the YMCA Board of Directors – a group of committed volunteers who live and work in this community – but it is the right decision for the future of our YMCA.
“Throughout the board’s comprehensive evaluation, analysis and vote to seek protection, our goal has remained steadfast: to give the communities we serve a stronger, healthier YMCA. Reorganizing with a court-approved plan provides an opportunity to do just that.
“All YMCA facilities, programs and services will remain operational without interruption. Our YMCA’s staff is fully committed to providing the same safe, high-quality programs and services that people have come to expect from the Y.
“Like other Ys across the country, the Huntsville YMCA faces mounting financial challenges. A large mortgage note, signed more than a decade ago, is coming due. This will deplete cash reserves, which has been noted by the Y’s auditor as a going concern. Membership numbers have declined since the pandemic. The Y has nearly 30% fewer members today than in 2019. Capital investments are not being made, and maintenance and repair needs and costs are increasing.
“We appreciate our lender, who tried to be helpful, but we could not reach an agreement for the Y to remain operational and plan for future sustainability. We believe seeking Chapter 11 protection is an important first step toward restoring our Y’s operational and fiscal health.
“Our YMCA has had the privilege of serving the children, families and communities in this area since 1910. We are incredibly grateful for the support of Y members, participants, volunteers, donors, and partners. Their ongoing support is crucial as we move forward, so the Y can continue to be a vital part of our community for years to come.”
What is Chapter 11?
Per USCourts.gov, This chapter of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.
A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a "reorganization" bankruptcy. Usually, the debtor remains “in possession,” has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money. A plan of reorganization is proposed, creditors whose rights are affected may vote on the plan, and the plan may be confirmed by the court if it gets the required votes and satisfies certain legal requirements.