Feds want judge to reject Florida operator’s bankruptcy plans

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A Florida retirement home operator’s bankruptcy plans could be in jeopardy, as federal regulators argue granting protection to the provider would prevent residents and their families from pursuing future lawsuits.

The Justice Department’s US Trustee Division has challenged the bankruptcy plan of Gulf Coast Health Care, which operates under Omega Healthcare Investors, ahead of a scheduled hearing. A Delaware court was expected to decide the case this week, Reuters reported for the first time Monday.

The company filed for first bankruptcy last October due to more than $200 million in debt and $49 million in rent owed to Omega. He cited declines in occupancy, staffing shortages and increased spending related to the COVID-19 public health emergency.

His proposed bankruptcy plan would pay $13.25 million to unsecured creditors and is backed by Omega, company owners and major lenders. This would protect affiliated service providers from potential liability lawsuits, according to court documents.

The federal government suggested the release also gave protection to Gulf Coast insurers, was ‘non-consensual’ and there was no option for the families to opt out of them.

Gulf Coast, in a response Thursday, noted that the releases did not cover the company or its insurers and amended its proposal to make that clear.

“[Gulf Coast is] in discussions with various constituents of the case regarding potential revisions to the litigation claims procedures and will file those revisions in a supplement to the Amended Plan,” the company said in court filings.

Gulf Coast operates 28 retirement homes in Florida, Georgia and Mississippi.

Janet E. Fishburn