Cedar Haven Acquisition LLC, operator of Cedar Haven, the former county home it bought from Lebanon County in 2014, has received bankruptcy court approval of a reorganization plan that clears the way for the continued uninterrupted operation of the facility while making payments to its creditors.

In 2013, with the nursing home losing about $1.5 million annually due to rising pension costs and falling Medicaid reimbursements, the county commissioners voted 2 to 1 to sell the facility to Montgomery County-based Complete HealthCare Resources (“CHR”). 

After some confusion as to the identity and relationship of potential buyers and new operators, as reported in 2018 by the Lebanon Daily News, Cedar Haven Acquisition LLC (“CHALLC”), emerged as the buyer of the facility’s non-real estate assets.

While CHALLC has operated Cedar Haven and owned its equipment and non-real estate assets since buying them from the county, the building and grounds along South 5th Avenue are owned by a separate company, 590 S. 5th Avenue LLC. CHALLC has been leasing the real estate from 590 S. 5th Avenue LLC.

CHALLC filed a Chapter 11 bankruptcy petition in Delaware on Aug. 2, 2019, citing millions owed to over 200 creditors.

Chapter 11 bankruptcies allow a business to continue operating while it devises a plan to repay creditors, completely or partially, over time.

CHALLC has continuously operated Cedar Haven since filing for bankruptcy, and initial fears that it would close its doors, putting elderly and disabled residents on the street, turned out to be unfounded.

Since the bankruptcy filing, CHALLC had tried unsuccessfully to find a buyer for the business.

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CHALLC’s Chapter 11 reorganization plan was approved on July 28 by U.S. Bankruptcy Judge J. Kate Stickles. CHALLC says the plan will provide for the continuing operation of Cedar Haven and the ongoing care of its residents,

Additionally, the plan, if successful, will build up a pool of money to pay “unsecured creditors” at least a portion of what they are owed.

Unlike “secured creditors,” who can get paid from a bankrupt company’s property because they have liens, judgments, or mortgages, unsecured creditors – such as contractors, vendors, customers, and credit card providers – are last in line and have no assurance they will receive a penny out of a bankruptcy.

CHALLC has told the bankruptcy court that there are about $12,300,000 in unsecured claims. According to the plan, the pool to pay unsecured creditors will be up to $2,000,000, to be funded quarterly by CHALLC through excess cash it may earn after paying secured creditors.

CHALLC receives most of its revenue from Medicaid, Medicare, and insurance payments on behalf of Cedar Haven residents.

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Chris Coyle writes primarily on government, the courts, and business. He retired as an attorney at the end of 2018, after concentrating for nearly four decades on civil and criminal litigation and trials. A career highlight was successfully defending a retired Pennsylvania state trooper who was accused,...