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Kentucky Supreme Court Says Nonprofit Must Pay Pension Liability


The Kentucky Supreme Court has ruled that a nonprofit mental health provider can’t use bankruptcy to escape its financial obligations to the state pension system.

The Lexington Herald-Leader reports the unanimous ruling on Thursday could help protect the financial viability of one of the country’s worst-funded public pension systems.

Louisville mental health provider Centerstone owes an estimated $130 million to the Kentucky Retirement Systems, which manages the state’s pension fund.

The court ruled that Centerstone had a statutory obligation to pay into the system, which bankruptcy does not erase. Centerstone had argued that it had a contractual obligation.

A concern for state officials was whether other nonprofits remaining in the system would use bankruptcy to leave if the Supreme Court ruled in favor of Centerstone.

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