Addiction treatment provider Retreat Behavioral Health has shuttered after an intensely chaotic and tragic week sealed the company’s fate.

Employees, internal emails and public documents paint a grim picture of a company in distress, leading to late and yet-to-be-paid paychecks for staff and the near-overnight closure of several facilities. This came following the deaths of two C-suite executives at the company — CEO and founder Peter Schorr and Chief Administrative Officer Scott Korogodsky.

Retreat Behavioral Health was a multi-state addiction treatment provider that operated residential and outpatient offices. It was founded in 2011.

It is still not clear if employees will get paid a final paycheck.

On June 27, Retreat Behavioral Health sent layoff notices to employees stating that it “will close in its entirety and cease doing business,” backdating the action to June 26. All employees, minus those retained for regulatory purposes, were terminated on June 21.

Throughout the previous week, local media reports showed Retreat Behavioral Health’s residential treatment centers and some outpatient locations in Connecticut, Pennsylvania and Florida shut down with no notice, leaving employees and patients in a lurch.

Private equity firm Stonehenge Capital recently acquired Retreat Behavioral Health. The terms of the deal were not announced. Previous media reports state Stonehenge previously loaned the company $6 million to start its Connecticut residential treatment location. Leaders at Stonehenge Capital have not returned a request for comment. 

Before the tragic developments of the past weekend, Retreat Behavioral Health showed internal signs of distress. Contractors and services stopped engaging with the company: bottled water was not being delivered, printing paper was in short supply and lab testing was not being picked up, according to employees who spoke on conditions of anonymity for fear of reprisals.

Some examples of financial distress manifest in more public ways.

Retreat Behavioral Health lost a $26,000 nonpayment dispute with the digital learning platform Docebo NA by default judgment, according to court documents from the 15th Judicial Circuit Court of Florida dated June 3. Also, Retreat Behavioral Health has been grappling with a federal lawsuit involving a $17.2 million loan default and foreclosure tied to its Palm Springs, Florida, residential treatment location. Coal Capital Group owns the property, and Retreat’s lease serves as security for the loan. Lapis Advisers filed the suit against the two on April 25.

More recently, Retreat Behavioral Health did not pay its employees on time for its June 7 payday. In a June 6 email, Korogodsky told employees that a “technical issue” would delay the deposits until later in the afternoon on the 7th.

“We want to emphasize that there is no reason for alarm,” Korogodsky wrote.

On June 7, Korogodsky wrote that a “perfect storm” of technical issues and time card corrections delayed the payroll process. Payments were to be in employees accounts no later than Monday, June 10. Employees confirm that that paycheck did come through.

This issue was not resolved with time and was long-running, leading to missed paychecks and closures. Alexander Hoinsky, Retreat Behavioral Health’s chief financial officer, told the local broadcast station WPTV that the company’s revenues had dipped and that the executive team had been aware of the dire situation for at least a year. BHB’s attempts to reach Hoinsky have not been successful.

Leading into the next payday, Retreat Behavioral Health got more bad news. On June 20, the court over the Florida facility foreclosure case handed down a clerk default against Retreat Behavioral Health “for failure to serve or file any pleading or document as required by law.”

Paychecks due on June 21 were not paid. Early that day, CEO and founder Peter Schorr died.

On June 23, Korogodsky told employees in an email that the company had no answers for the uncertain financial situation. Employees told BHB that they were to work to discharge patients to other care settings, where relevant, by Wednesday, June 26. Korogodsky died the same day.

As of June 28, several Retreat Behavioral Health employees have told BHB they have not yet been paid their June 21 paychecks. The termination notice does not detail if and when they will get paid.

It’s not entirely clear why the company’s finances fell apart. Hoinsky told WPTV that he was shut out of handling Retreat Behavioral Health’s finances; Schorr handled that directly. The mid-level managers and administrative staff BHB has reached said they rarely had insights into the financial performance of the organization. Hoinsky suggested the company may find some relief once it collects what it is owed by payers.

“The answers you are looking for probably went to the grave with Peter and Scott,” one employee told BHB.

Financial distress in the behavioral health industry is not uncommon. The lack of parity in reimbursement and administrative processes with payers often leads to modest profit margins being further whittled away. On top of that, behavioral health patients, especially those seeking addiction treatment, may be more difficult to care for.