Pennsylvania bankruptcy court late Monday approved the $53 million sale of nine nursing homes in the state to affiliates of Kadima Healthcare Group, as part of Chapter 11 bankruptcy proceedings for more than a dozen facilities operating under Comprehensive Healthcare Management Solutions.
Notably, transaction documents do not transfer assets to any insiders, affiliates, officers or members of Comprehensive, including but not limited to Mordy “Ephraim” Lahasky, or any other owner of any interest in Comprehensive, according to court documents signed by U.S. Bankruptcy Judge Carlota M. Bӧhm.
In fact, the deal included a provision requiring Lahasky to divest his 5% share of other affiliates of Kadima to avoid the involvement of existing company insiders in the new ownership, according to a report from Law360.
“Buyers, New Operators, the Debtors, and their respective representatives and affiliates have not engaged in any conduct that would cause or permit the sale of the Purchased Assets, the Transactions, or this Sale Order to be avoided,” the court found. “Buyers and New Operators are not ‘insiders.’”
Skilled Nursing News reached out to Kadima and Bass Berry & Sims, law firm representing Comprehensive, for additional commentary on the sale, but did not hear back as of press time.
Debtors struck an agreement with the Department of Health & Human Services (HHS), insurers and unions representing the nursing homes’ employees, which was finalized over the weekend, which changed Monday’s hearing from a contested evidentiary hearing to consensual sale, Law360 reported.
The deal included conditions intended to address all objections raised during the potential sale, including concerns over whether Lahasky would give the current owner any ongoing control over the new owners, solved by his divestiture of the 5% stake upon consummation of the purchase.
The deal also specifies which insurance contracts will be carried over from Cigna; the insurer had previously objected to the sale as well.
The U.S. Department of Labor (DOL) tried and failed to block the sale last year, alleging Comprehensive sought to “opportunistically offload” assets to an “insider” in order to frustrate, if not fully thwart, Acting Secretary of Labor Julie Su’s ability to recover a judgment.
The DOL alleged that Comprehensive wanted to unload assets before its trial regarding back wages and overtime, which in July resulted in Comprehensive being ordered to pay $36 million. Comprehensive filed for Chap. 11 in May, citing declines in occupancy, staff shortages and aforementioned litigation.
The deal notes that the sale doesn’t preclude the DOL from continuing to pursue its federal unpaid-wages claims against the original owners; the new owners can only be held responsible for labor violations that occur after the sale.
The nursing homes were split into three groups named after the owners of the properties they operated from: Consulate, Maybrook and Cuarzo. The sale covers the seven Maybrook properties and two Consulate facilities, according to Law360.
Lahasky is an owner of Comprehensive, and has a separate business relationship as a 5% owner in six facilities operated by Kadima in eastern Pennsylvania. But, Lahasky has no direct equity interest in any of the purchasing limited liability companies (LLCs), according to court documents from last October.
Comprehensive demonstrated “good, sufficient and sound business purposes and justification, and compelling circumstances for the sale,” the court found. The circumstances, they said, included the fact that Kadima offered the best offer and there were no other qualified bids within the deadline.
The transaction ended up being the best opportunity to realize the highest value for the purchased assets and avoid potential decline and devaluation of the facilities, court documents show.
Companies featured in this article:
Comprehensive Healthcare Management Services, DOL, HHS, Kadima Healthcare Group, Law360
