Crystal Care Home Healthcare Files Chapter 7 Bankruptcy

Updated: 02/19/2014 10:57 PM By: Beth McDonough

Crystal Care Healthcare Services of Richfield asked a federal judge in Minneapolis to convert its case from Chapter 11 to Chapter 7 bankruptcy.

The request Wednesday from the long-troubled company is pivotal, because it means the agency will close and will not pay its debts. That leaves hundreds of employees without thousands of dollars and patients scrambling to find caretakers.

5 EYEWITNESS NEWS has been digging into this since last May, when workers paychecks started bouncing. Patients told KSTP they felt abandoned. 

Months later, Crystal Care filed for Chapter 11 bankruptcy, which means it could stay open while reorganizing its debt.

On Wednesday, Crystal Care went back to court, asking for more help. Dozens of employees were on hand and they were outraged. 

KSTP reporter Beth McDonough asked who was still owed money by Crystal Care and everyone raised their hand. 

Each one was owed months’ worth of back wages, in other words, a lot of money.

"We worked for her, we earned it, she should be paying us the money," Annette Ilgen said.

The owner and operator of Crystal Care, Sally Knutson, said, "It's a sad situation for everyone that's all I can tell you.”

KSTP asked why she filed for Chapter 7. Knutson replied, “Because of the Department of Human Services." 

Court records show DHS, which oversees the home health industry, notified Knutson last month they were ending state funding. 

On average Crystal Care received $7-9 million a year. 

With that kind of money, we asked Knutson where'd it go and why file Chapter 7 instead of trying to stick out Chapter 11 and pay the people they owe, including employees. 

That was always the plan, she said. As to what happened, Knutson said she didn't have control over it.

Bankruptcy records reveal Crystal Care's debt exceeds $5 million. 749 workers filed wage claims totaling $1.3 million. 

Looking into the faces of all these people, desperate for the money they earned, the judge called it a difficult decision, but converted the case from Chapter 11 to Chapter 7. 

Crystal Care must stop operations in March.  Frail patients like Chloe Bebee and 258 others like her, will have one month to find new help at home. 

Bebee's current caretaker feels blindsided and broke, "They owe me $1,500 and I know I'm not gonna see that."