Merrymeeting Behavioral Health Services of Brunswick has filed for bankruptcy after abruptly closing last month leaving 170 workers unemployed and 400 clients temporarily without services.

The 111-page filing Tuesday in U.S. Bankruptcy Court indicated the agency will seek Chapter 7 bankruptcy, which means it will liquidate all assets. The bankruptcy listed $107,332 in assets and $266,636 in debt.

David Perkins, Merrymeeting’s attorney, said the next step will be for a trustee to take over and begin distributing whatever is left to the agency’s creditors. He said the largest body of creditors is former employees, and they have priority status over other creditors.

Perkins estimated there would be about $130,000 in cash to distribute to employees who never got their final paychecks. But employees likely won’t get the full amount owed them, roughly $200,000 in all, because there simply isn’t enough money, he said.

Merrymeeting’s former owner, Jim Talbott, who has been accused by former employees of mismanaging the agency prior to its closure, was named as a co-debtor in the bankruptcy filing, meaning creditors could try to obtain what they are owed directly from him.

In the filing, Talbott’s salary was listed as $6,923.20/biweekly, or $180,000 a year. The agency’s top two administrators, president Alexander Katopis and vice president Kacie Parker, made $80,000 and $72,000 respectively last year although each earned a bonus of $12,000 as well.

Merrymeeting operated out of a building on Pleasant Street in Brunswick, but the bulk of its work was providing home health services to people with mental illness, including help with daily living activities, such as doing laundry, shopping for groceries, socializing and taking medications.

In late March, Merrymeeting officials had blamed the agency’s impending closure on changes being implemented by the Maine Department of Health and Human Services to Section 17, a part of the MaineCare program that provides community support services to the mentally ill, including help with daily living activities.

Under the changes, which had yet to go into effect when Merrymeeting announced it would close, only patients with schizophrenia or schizo-affective disorders would automatically qualify for services under Section 17. DHHS will allow certain exceptions, including recent hospitalization or if a patient’s doctor provides evidence that the patient needs the services.

DHHS officials and former employees expressed skepticism that the Section 17 changes forced Merrymeeting to close, because they had yet to go into effect and had not yet had any financial impact on social service agencies. The former employees suspect there are other underlying reasons for the bankruptcy.

Earlier this month, Maine Department of Labor Spokesman Julie Rabinowitz said it is illegal for a company to fail to pay employees for work performed. However, she said, whether the state pursues a company in court depends on a cost-benefit analysis of whether the amount likely to be recovered would be more than the cost of taking the company to court. She would not say whether the state would go after Merrymeeting, a privately held, for-profit company.

Rabinowitz said many former employees have found employment elsewhere, including a number who participated in an April job fair sponsored by the labor department.

Although it is not listed in the bankruptcy filing, the building at 76 Pleasant St. in Brunswick that housed the agency will be sold. Perkins said proceeds will be used to pay off any debt, but he didn’t anticipate that there would be extra money. Talbott, the agency’s former director, is a member of Triple T Realty, which owns the building.

Also included in Merrymeeting’s bankruptcy filing was the repossession of a 2015 Mercedes SUV. It did not say who used the vehicle.

Mary Beth Freeman, a former Merrymeeting employee, said she got a job with a different agency, but Merrymeeting owes her several hundred dollars, and it’s causing her some temporary financial problems.

“I hope (Talbott) is going to have to deal with the repercussions,” Freeman told the Press Herald this month. “This has caused considerable hardship for the clients and for the employees.”

Eric Russell can be contacted at 791-6344 or at:

erussell@pressherald.com

Twitter: PPHEricRussell