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Doctors are trying to move the clinic’s bankruptcy case from Galesburg Cottage to Peoria


GALESBURG — Three former doctors practicing in Knox Clinic Corporation have filed a petition to move the East Michigan clinic’s bankruptcy proceedings to Central District of Illinois in Peoria.

Sanjay Sharma, CEO of the Clinic and Cottage Hospital, filed for Chapter 11 bankruptcy on Jan. 3 in Michigan federal court. In the filing, Sharma claimed the Eastern District of Michigan as his principal place of business before the filing.

The address of Knox Clinic Corporation listed on the bankruptcy filing is 3637 Lahser Road, Bloomfield Hills, Michigan. This address is listed as a single family home on realtor.com.

Cottage Hospital, which closed on January 8is a separate business from Knox Clinic Corporation, although both businesses were purchased on June 25, 2020 by Sharma’s SBJ Group Inc. of Austin, Texas.

Two of the three doctors who requested the site transfer had their contracts terminated after the clinic filed for bankruptcy. Dr. Gregory Schierer has been advised On January 6, along with four other clinic doctors, his contract was terminated. Dr. Mark DeYoung’s contract ended on February 2. He practiced in an office in Knoxville. Strauch retired on December 31, 2021after 42 years of medical practice.

The reason for the motion to change the location of the bankruptcy proceedings, according to Strauch, is that many of the dozens of creditors are in that area.

He confirmed on Wednesday that the three doctors were creditors in the bankruptcy. Court filings show DeYoung claimed $84,775, Strauch, $57,448 and Greg Schierer, $18,916.

Doctors at the clinic who filed complaints

• Craig Wilson – $107,099

• Mark DeYoung: $84,775

• Carl Strauch- $57,448

• Marc Katchen – $36,516

• Greg Schierer – $18,916

(Doctor Thomas Patterson is listed as a creditor by the clinic, but no claim by Patterson is on the court filing.)

The 11-page list of claims includes 53 Galesburg-area people — including many former employees — who filed claims ranging from $22.08 to $107,099. In total, the people are claiming $386,005 owed to them by Knox Clinic Corporation.

Galesburg attorney Robert Lindstrom prepared the claims.

He said the court will decide whether to deny the motion, grant the motion and transfer the Central District of Illinois to Peoria, or dismiss the case for being filed in the wrong place.

Knox Clinic Corporation has filed an objection to the motion and a hearing is set for March 24 in Michigan.

In a letter to employees regarding the Jan. 3 bankruptcy, Sharma said the move would allow the clinic to retain its services.

“It has become necessary, given recent developments, for the clinics (not the hospital) to file for Chapter 11 bankruptcy. What this will allow us to do is to reorganize the clinics and emerge in full security to preserve the services we can,” Sharma’s letter mentioned.

Announcing the purchase of Cottage Hospital in 2020, Sharma said he looked forward to working with doctors and staff.

“We plan to enhance growth strategies to meet the needs of the communities served by Galesburg Cottage Hospital. We appreciate the community support in completing this transaction and look forward to working with the dedicated employees and licensed professionals of Galesburg.

Now, some of those employees are filing claims to get money they believe is owed to them by their former employer.

Earlier this week, OSF HealthCare announced he signed an exclusive letter of intent with Cottage Hospital for the OSF to purchase real estate, medical equipment and other assets owned by Cottage Hospital. OSF said it has filed a letter of intent and expects to complete the sale this spring.



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