SAN FRANCISCO — The Sierra Kings Health District in Reedley, Calif., last week filed for Chapter 9 municipal bankruptcy protection after discovering that the proceeds of bond sales in 2006 and 2007 were misused.

The hospital district has been losing money since at least 2006, according to its financial statements. With mounting losses, hospital management spent $1.7 million of bond funds on operating expenses, beginning in June 2008, the district said in a material event notice filed on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system early last week.

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