Cedar Haven Bankruptcy: Search for buyer continues, first patient care report filed

3 min read1,211 views and 67 shares Posted November 5, 2019

Update 11/6: This story has been updated to include comments from Stone Barn communications director Meg Farrington, received via email after this post was first published Tuesday morning.

At an Oct. 28 hearing in the Cedar Haven bankruptcy, a Delaware bankruptcy court authorized the former county home’s owners to sell the facility free of liens and other obligations. The first court-ordered patient care watchdog report has also been filed by the Pennsylvania Department of Aging.

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The skilled care facility is now owned by Cedar Haven Acquisition, LLC. (“CHALLC”), a private company. The County of Lebanon sold the facility to CHALLC in 2014, and has not been involved in its operation since.

Search for buyer unsuccessful so far

Last August, the bankruptcy court gave CHALLC permission to hire a broker to conduct a nationwide search for a buyer. That effort appears to have been unsuccessful.

In a motion filed in bankruptcy court on Oct. 8, CHALLC asked for permission to sell Cedar Haven’s assets “free and clear of all liens, claims, encumbrances, and other interests.” The court approved the motion at the Oct. 28 hearing.

The purpose of a free and clear sale is to make bankruptcy assets more attractive to potential buyers, in turn making it easier to raise cash to pay creditors who hold liens, known as “secured creditors.”

Buyers get the assets lien-free, so they don’t have to worry that Cedar Haven’s creditors will come after them. The liens get transferred to the proceeds of the free and clear sale, and the secured creditors and CHALLC work things out, subject to approval by the bankruptcy court.

Common types of “liens and encumbrances” are mortgages, judgments against real estate, and collateral interests in a debtor’s property, which are also known as “security interests.”

Free and clear sales in bankruptcies usually have no effect on “unsecured creditors” who do not hold liens or collateral. Unsecured creditors are commonly providers of goods and services regularly used in everyday operations.

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However, CHALLC has told the court that, out of any sale, over $1,500,000 owed to about 50 unsecured creditors is expected to be paid, either by CHALLC or the buyer, to satisfy outstanding contracts. The largest such creditor is Healthcare Services Group,Inc., which CHALLC says would be paid $514,684.

Patient Care Report

The watchdog, officially known as a “patient care ombudsman,” is Margaret Barajas of the Pennsylvania Department of Aging’s Long-Term Care Ombudsman Office. Her first 60 day report, dated Oct. 20, is based on nine weekly visits to the facility, each lasting two to three hours, between Aug. 27 and Oct. 20.

Prominent in the report is the ombudsman’s conclusion that the facility is understaffed, even though only 286 of 324 beds were occupied on Oct. 20. The report does not compare current staffing levels to those existing just before the county sold the home in 2014.

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Facility administrator Steven Zablocki told the ombudsman that the greatest challenge he faces is recruitment of qualified care staff. The ombudsman reported that her “understanding is that new care aides have completed training since the September facility visit.”

The report also notes that “[t]he PA Department of Health completed a facility survey on August 2, 2019. Based on clinical record review, it was determined that the facility failed to provide adequate supervision for one of six sampled residents who had falls. A corrective action plan was accepted and approved by the Department of Health on August 14, 2019. No regulatory issues are recorded for the current reporting period.”

In addition to an overall assessment of staffing and operations, the ombudsman’s report contains summaries of 14 “Resident Initiated Complaints/Concerns,” almost all related to food quality. None are described as chronic or uncorrected.

The ombudsman ends the “Resident Initiated Complaints/Concerns” section by stating that “[m]ost of the residents report that they are satisfied with their care. Of those with care concerns, the complaints pertain to the menu, activities, and call bell response time.”

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Several requests for comment on both the effort to find a buyer and the patient care report, sent to CHALLC’s bankruptcy attorneys and to Cedar Haven Administrator Steven Zablocki, had not been returned by publication time.

Meg Farrington, Director of Marketing and Communications at Stone Barn, told LebTown in an email following our initial publication of this story that Cedar Haven is not at risk of closing.

Farrington emphasized in her email to LebTown that residents and staff do not need to be worried about losing their homes or their jobs, and said that the community should remain calm while the restructuring continues.

“Unfortunately, some public officials have taken the tactic of trying to make Cedar Haven look like we are failing in order to prove a political point.”

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According to Farrington, the process is going as expected and “the reality is quite positive,” with a handful of recent accolades and partnerships offered as proof.

“We are proud of our staff and their ongoing commitment to providing high-quality care for our residents.”

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