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North Shore Manor proposes 5-year repayment, reorganization plan

LOVELAND — Majority stockholders of the North Shore Manor Inc. nursing home in Loveland say that they can repay the majority of their obligations and shore up nursing-home operations over a five-year period if the U.S. Bankruptcy Court in Denver approves the plan for reorganization filed Wednesday.

The plan likely will see opposition over the coming days from the organization’s primary creditor, Columbine Health Systems and its owner, Robert Wilson. 

But the alternative to the Chapter 11 bankruptcy reorganization, North Shore Manor said, is Chapter 7 liquidation, in which case unsecured creditors would get nothing.

Aaron Garber, attorney for North Shore with the firm Wadsworth Garber Warner Conrardy PC, laid out the case for the reorganization under Chapter 11. 

He reviewed the history, which in his telling dates back to the 1970s when four families created the 120-bed nursing home just across 29th Street from North Lake Park. He noted that shares in the operation have changed over the years as the founders died or sold their interests, including 15% to Wilson, who later became the organization’s general manager and president. 

Wilson created Columbine Management Services to manage North Shore and other senior-living and nursing-home properties that his much larger organization owned and operated. He also created multiple vendor entities that provided between 80% and 90% of the services and materials to North Shore. 

Financial fortunes began to turn for North Shore in 2018 and worsened during the pandemic beginning in 2020, the narrative notes. 

Wilson notified “certain shareholders” in early 2022 that he planned to retire and he wanted to sell his interests in not only North Shore but all of Columbine. The plan, as described, would have him buy out the other shareholders for $12 million and sell that and the rest of Columbine to an undisclosed party. That deal fell through.

In late 2022, Wilson told the other stockholders that the financial condition of the nursing home was “in a tenuous cash position” but that he had decided not to retire and would turn around the institution’s fortunes. 

In November of that year, the shareholders including Wilson adopted a resolution appointing a new board. Eighty-five percent of the stockholders also revoked Wilson’s status as managing partner.

In December, Wilson reported that a financial turnaround was in the works and there would be no need for a cash infusion from the stockholders, Garber wrote. Wilson also said that he personally had been shoring up the operation with hundreds of thousands of dollars of his own money and repaying himself from accounts receivable when they came in.

In January, the new board requested information from Wilson and Columbine, which was not provided, Garber said.

In February, Wilson again made a call for a cash infusion from stockholders in the amount of $1 million. The board then went looking for a bankruptcy counsel.

“The board was concerned about the handling of the finances of NSM (North Shore Manor) by CMS (Columbine Management Services) including, but not limited to the debtor’s utilization of the Wilson vendors and loan transactions between NSM and Wilson.”

On March 6, bankruptcy was filed.

In what appeared to be a precipitous change in financial standing of the organization, and suspicions about whether North Shore was getting the best deal from vendors, Garber said the stockholders have reserved the right to pursue legal action against creditors.

“The debtor is reserving the right to bring avoidance actions … (under) state-law-based fraudulent actions. … The debtor is also reserving the right to bring any and all claims that may exist against Wilson and entities related to Wilson,” Garber wrote.

The restructuring plan disputes certain creditor claims from Wilson’s organization. 

The plan sets out a five-year system whereby secured claims would be paid and allowed unsecured claims would be paid to the degree possible, which may be at a 61% level, the filing suggests.

The organization would set aside a designated amount each month, which would increase each year for the five-year period, in order to pay the claims. In the first year, $12,150 per month would be set aside for debt repayment, $18,634 per month the second year and growing to $30,783 per month in the fifth year. The organization expects to have $13.2 million in revenue the first year of the plan and $13.05 million in expenses, leaving $145,000 for payment to creditors.

The Chapter 7 liquidation alternative to the plan, Garber wrote, would result in no payments to unsecured creditors because of the expenses of winding down the business and taking care that patients are located in other facilities.

The actions filed in Federal Bankruptcy Court in Denver are North Shore Manor Inc., case number 23-10809, and North Shore Associates LLC, case number 23-10808.

Source: BizWest