Rural/Metro to Burchett: Bankruptcy filing won't curtail Knox County service

Knox County Mayor Tim Burchett saw no need for alarm Monday over news that Rural/Metro Corp. announced it had filed for bankruptcy protection as it seeks to reorganize.

In a prepared statement, Burchett said he had been in touch with officials from the company that provides ambulance service to all county residents and business and fire protection for those outside the city of Knoxville.

“I have been in touch with Rural/Metro’s leadership and they’ve assured me that their operations in Knox County will continue as normal,” Burchett said. “Their contract with Knox County contains provisions in the event that they are unable to fulfill their obligations. If their obligations are not met, Knox County will take appropriate action. In the meantime, my staff and I will continue to monitor Rural/Metro’s financial situation.”

Scottsdale, Ariz.-based Rural/Metro announced Monday that it has filed for Chapter 11 reorganization in U.S. Bankruptcy Court for the District of Delaware. This comes after Rural/Metro announced Thursday that it had elected to skip an interest payment on unsecured bonds that was due July 15. This was done as part of an effort to realign its capital structure and operations, the company said in a statement.

Mayor’s spokesman Michael Grider said Thursday that the county was keeping tabs on Rural/Metro’s situation and if the company was no longer able to provide ambulance service, the county would take steps to cancel the contract and find another provider.

In 2012, American Medical Response, another ambulance company, had sought the contract with Knox County, and contested the awarding of the five-year contract to Rural/Metro. Contacted Monday for a response to the Rural/Metro bankruptcy issue, AMR spokesman Mike Cohen said the company did not wish to comment.

In announcing its bankruptcy filing, Rural/Metro gave assurances its East Tennessee operations, including serving Knox, Blount and Loudon, counties, would continue.

“All operations in East Tennessee will continue as usual,” Rural/Metro of East Tennessee Division Manager Rob Webb said in a statement. “Rural/Metro will continue to meet all of our contractual obligations, including maintaining excellent medical and fire protection services to the citizens we serve here.”

The company said it had reached agreement in principal on a comprehensive financial restructuring plan that will reduce its funded indebtedness by about 50 percent by converting certain debt to equity and cutting its interest expense in half.

“We expect to move through this process quickly and to be a stronger, more competitive and more profitable organization,” Rural/Metro Corp. CEO Scott A. Bartos said in a statement.