Nursing home operator Preferred Care, which filed for Chapter 11 bankruptcy protection in November of last year for 33 of its SNFs, is seeking a court order to extend the deadline for filing a restructuring plan to Sept. 10. The current deadline is June 11.
It is the debtors’ second request for an extension of the exclusivity periods to file and confirm such a plan, according to the motion filed on May 10 in the U.S. Bankruptcy Court for the Northern District of Texas.
Of the 33 SNFs affiliated with Preferred Care that filed for bankruptcy, 12 were in New Mexico and 21 in Kentucky. The facilities were facing 163 personal injury lawsuits, which sparked the move into bankruptcy. The largest judgment, for $28 million against a facility in Kentucky, came at the end of September of last year.
Preferred Care and its debtor affiliates have taken “significant affirmative steps to identify and negotiate operating transfer agreements” and aim to seek approval for the operations transfer agreements for some or all of the Kentucky and New Mexico facilities in the coming weeks. The debtors expect to seek approval of the proposed transfers in late July, and to file motions to settle “certain significant claims held by their estates” that should help facilitate the proposed transfer of the facilities, according to the motion.
“Effectuating the debtors’ plan to transfer their facilities in the coming weeks and months—while also ensuring continued resident care at those facilities—has required and will continue to require a tremendous amount of attention from the debtors’ personnel and representatives, including counsel,” the motion said.
“As a result, the debtors and their professionals have not yet formulated a plan of reorganization, and are still weighing their options regarding the filing of a plan or other course of action once their facilities have been successfully transferred to new operators.”
In addition, the process of transferring operations will take time even after filing the motions to approve the related agreements, the bankruptcy document argued. If granted the extension, the debtors could focus on transferring the facilities before filing a restructuring plan that maximizes value of the bankruptcy sales, it said.
“The relief requested in the motion is not intended for the purpose of coercing or strong-arming any creditor but rather to benefit the stakeholders as a whole,” the document said. “The debtors have consistently maintained that their overarching purpose is to transfer their operations for the benefit of their residents. This motion is intended solely to allow that transfer process to play out prior to the negotiation and preparation of an exit strategy for the debtors’ bankruptcy cases.”
A hearing on the motion is scheduled for June 5.
Written by Maggie Flynn
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