Introduction
On August 2, 2019 (the “Petition Date”), Cedar Haven Acquisition, LLC (the “Debtor”) filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.
The Debtor is represented by Chipman Brown Cicero & Cole, LLP. The case has been assigned to the Honorable Judge Christopher S. Sontchi. A hearing on the Debtor’s first day motions was held on August 6, 2019. A meeting to the form the unsecured creditors committee has not yet been scheduled.
Background
Headquartered in Lebanon, Pennsylvania, the Debtor’s business focuses on providing professionally supervised nursing care and related medical and health services to persons whose needs are such that they can only be met in a nursing facility on an impatient basis because of age, illness, disease, injury, physical or mental infirmity. As a licensed bed facility, the Debtor offers its patients a continuum of care in a campus-style setting, providing living accommodations and related health care and support services. The Debtor employs approximately five hundred employees as of the Petition Date.
Through various court filings, the Debtor indicates that it has encountered financial difficulty due to the burdensome costs deriving from (i) a prior union strike, (ii) challenges due to reductions in Medicaid reimbursement rates, and (iii) ten lawsuits filed by various former vendors seeking in excess of $4.9 million in damages.
Financial Condition
As of the Petition Date, the Debtor estimates that it owes approximately $4.3 million in secured debt. Capital Finance, LLC is owed approximately $1.5 million. Charles B. Blalack, the managing partner of the Debtor’s parent company, is owed approximately $2.8 million, which is secured by a junior lien on all the Debtor’s assets.
The Debtor is currently a defendant in ten lawsuits filed by various former vendors seeking in excess of $4.9 million in damages.
DIP Financing Motion
The Debtor is seeking authority to enter into a Debtor-in-Possession facility with Capital Finance, LLC. The Debtor is requesting a senior secured super-priority debtor-in-possession facility in the amount of $3 million.
An interim order approving the motion was entered by the Court on August 6, 2019. A hearing to consider entry of a final order is scheduled for September 4, 2019, at 10:00 a.m.
Other Significant First Day Motions
Critical Vendor Motion
The Debtor’s business is dependent upon its continued access to essential goods and services provided by various critical vendors. The payment of the critical vendors is vital to the Debtor’s ability to continue to provide its technical services on a timely, dependable basis to its customers without interruption. The Debtor is requesting to pay, in the ordinary course of business, certain critical vendors in the amount of $100,000 on an interim basis and $200,000 on a final basis.
An interim order approving the motion was entered by the Court on August 6, 2019. A hearing to consider entry of a final order is scheduled for September 4, 2019, at 10:00 a.m.
Wages and Benefits Motion
The Debtor seeks interim authority to pay certain employee obligations and maintain and continue employee benefits programs and schedule a final hearing on the motion in an aggregate interim amount not to exceed $610,000.00. As of the Petition Date, the Debtor employs approximately five hundred individuals. The Debtor asserts that no employee will be paid more than the $13,650, the pre-petition wages and benefits limit.
An interim order approving the motion was entered by the Court on August 6, 2019. A hearing to consider entry of a final order is scheduled for September 4, 2019, at 10:00 a.m.
Insurance Motion
The Debtor is current on its obligations under various insurance policies, but, out of an abundance of caution, seeks authority to satisfy any such pre-petition obligations outstanding as of the Petition Date. The Debtor also seeks authority to maintain existing insurance policies and to renew, revise, extend, supplement, change, or enter into new insurance policies as needed.
An interim order approving the motion was entered by the Court on August 6, 2019. A hearing to consider entry of a final order is scheduled for September 4, 2019, at 10:00 a.m.
Customer Programs Motion
The Debtor seeks authority to continue, maintain, and to pay pre-petition obligations related to its pre-petition customer refund program. As of the Petition Date, the Debtor estimates that approximately $27,000.00 in refunds and credit balances may be due under its refund program. The Debtor is seeking authority to pay and allow offsets up to $9,000.00 in refund program obligations.
An interim order approving the motion was entered by the Court on August 6, 2019. A hearing to consider entry of a final order is scheduled for September 4, 2019, at 10:00 a.m.
Taxes and Fees Motion
The Debtor is seeking authority to pay certain pre-petition taxes and fees that, in the ordinary course of business, accrued or arose before the Petition Date. As of the Petition Date, the Debtors owe approximately $4,000.00 in pre-petition taxes and fees.
An interim order approving the motion was entered by the Court on August 6, 2019. A hearing to consider entry of a final order is scheduled for September 4, 2019, at 10:00 a.m.