Bank tells judge that Iowa nursing home residents are in a ‘precarious position’ – Iowa Capital Dispatch

A Nebraska financial institution has advised a federal decide that the proposed new proprietor of an Iowa nursing dwelling chain has left the aged residents of these amenities in a “precarious place.”

Lincoln Financial savings Financial institution is asking the decide for the authority to subpoena information tied to the deliberate sale of Iowa’s QHC Services nursing dwelling chain. The financial institution says it’s “deeply troubled” by the actions of the chain’s proposed new proprietor, who now desires to purchase QHC for $4.5 million – far lower than the $12 million it agreed to pay at an public sale simply six months in the past.

The client’s refusal to maintain its finish of the discount has put the troubled nursing dwelling chain in a troublesome place, the financial institution says, with its money reserves being depleted and no different potential patrons on the horizon.

QHC Services, which owns eight nursing properties and two assisted residing amenities in Iowa, has been cited for a minimum of 184 regulatory violations prior to now 21 months and owes $6 million to state and federal taxpayers.

The corporate filed for chapter late final 12 months amid efforts to discover a purchaser for the entire chain’s belongings. In late February, Blue Diamond Equities, also referred to as Blue Care Houses, submitted a letter to QHC agreeing to buy QHC for $11.6 million.

At the moment, the principal proprietor of Blue Diamond was Shmuel Haikins. Howard Weiss, who has a monetary stake in a bunch of California nursing properties, was appearing as Blue Diamond’s monetary backer. The 2 males allegedly offered QHC with paperwork displaying they’d the cash in hand to finish such a sale.

Their supply triggered an public sale, at which Cedar Well being Group, an East Coast improvement firm, bid $12.1 million — $100,000 greater than Blue Diamond. That left Blue Diamond because the backup bidder in case the deliberate sale to Cedar Well being went south, which is precisely what occurred.

Court docket information present that shortly after the public sale, an legal professional for Cedar Well being wrote to QHC’s representatives, explaining that Cedar Well being was attempting to find out whether or not any of the Iowa nursing properties have been “in imminent hazard of decertification” by Medicare as a result of quality-of-care points. The legal professional identified that two of the QHC properties had been designated Particular Focus Services by the federal authorities, indicating an extended, uncorrected sample of great violations.

Cedar Well being then backed out of the sale, leaving Blue Diamond because the successful bidder. Blue Diamond, nevertheless, rapidly reached the conclusion that $12 million was an excessive amount of to pay for QHC, and it sought the court docket’s approval to enter into a brand new settlement that will allow it to purchase QHC for simply $4.5 million – with the chain’s three most troubled care amenities shut down and excluded from the deal.

That proposal instantly raised considerations at Lincoln Financial savings Financial institution, which had loaned QHC $2 million to maintain the corporate afloat whereas the deliberate sale and the chapter labored their method by means of the court docket system. Blue Diamond noticed the three nursing properties it needed closed as “too unprofitable,” the financial institution alleged in court docket filings.

Financial institution ‘deeply troubled’ by Blue Diamond

Though the court docket lately refused to conform to the proposed new phrases of the sale, the financial institution now says it absolutely expects QHC to file a renewed movement to win the court docket’s approval of the revised deal.

In court docket papers filed earlier this week, the financial institution knowledgeable the court docket that it “is deeply troubled by the actions of the Blue Diamond events,” notably given the character of QHC’s enterprise: senior care. The financial institution says the court-approved bidding procedures for the sale of the chain clearly and unequivocally said that QHC’s belongings have been to be bought on an “as is” foundation, and that every one due diligence by any potential patrons was to be accomplished previous to the public sale happening.

The financial institution advised the court docket this week it seems that Blue Diamond now desires a major discount within the sale worth “for apparently no purpose apart from the truth that the Blue Diamond events now not just like the deal that they’re legally obligated to consummate.”

The financial institution says that in current talks, Blue Diamond has refused to considerably enhance the quantity it can pay for QHC. The financial institution says Blue Diamond has put QHC in a “troublesome place” since QHC doesn’t have the funds for to easily forgo a sale and maintain working the nursing properties by itself. QHC, the financial institution factors out, is “months previous the public sale and sale efforts, with no different purchasers in sight.”

Due to that, the failure to consummate a sale rapidly will depart the residents of QHC’s care amenities in a “precarious place,” the financial institution has advised the court docket. And due to QHC’s debt, the financial institution says, an investigation of Blue Diamond is “economically prohibitive” for QHC and so it falls to the financial institution to difficulty subpoenas and demand solutions.

The financial institution acknowledges that whereas collectors shouldn’t have an unfettered proper to conduct examinations of debtors underneath federal chapter guidelines, it’s inside the court docket’s discretion to order such examinations.

QHC owes taxpayers $6 million

The financial institution is asking the court docket for the authority to subpoena Blue Diamond for paperwork and to take the depositions of its executives. The banks says these steps are “sadly obligatory to aim to grasp” the true causes for the newly brokered buy settlement.

Separate from the deliberate sale, there nonetheless is the unresolved matter of tens of millions that QHC owes to taxpayers.

Court docket information present the chain owes the federal authorities a complete of $2,108,910 for unpaid fines associated to quality-of-care regulatory violations and COVID-19 Accelerated and Superior Funds it collected within the midst of the pandemic.

Settlement proposed on tens of millions that Iowa nursing dwelling chain owes taxpayers

As well as, state information present QHC owes the Iowa Division of Human Providers $3,930,784 in unpaid charges. With greater than 300 different collectors lined up and in search of fee from QHC, the corporate is now asking that its debt to the state be handled as a “decrease precedence.”

The eight skilled-nursing amenities owned by QHC are the Crestridge Care Heart in Maquoketa; Crestview Acres in Marion; Sunnycrest Nursing Heart in Dysart; QHC Fort Dodge Villa; QHC Humboldt North; QHC Humboldt South; QHC Mitchellville; and QHC Winterset North. The 2 assisted residing facilities are QHC Madison Sq. in Winterset and QHC Villa Cottages of Fort Dodge.

Collectively, these amenities have a most capability of greater than 700 residents, though the three amenities Blue Diamond has sought to exclude from the sale — QHC Humboldt South, QHC Mitchellville and Sunnycrest Nursing Heart — have closed in current weeks.