Goldner Capital Management, a private equity firm once prominent in the skilled nursing sector, has filed for bankruptcy, taking responsibility for what it calls a coronavirus-era lending “scheme.”
In a Chapter 11 filing filed last week in U.S. Bankruptcy Court for the Eastern District of New York, Samuel Goldner said GCM and several of its subsidiaries have few assets but debts between $10 million and $50 million. He said that.
GCM is exclusively owned by the Goldner Family Trust and managed by Samuel Goldner.
The company focuses on post-acute care and invests primarily in real estate and skilled nursing facility operations. At its peak, the company had assets in seven states and facilities that employed more than 6,500 people, Goldner said in a statement accompanying the filing.
But the New York-based company has faced increasing financial pressures and associated increases in operating costs and labor costs, as well as increased regulatory scrutiny, which Goldner said dates back to the emergence of the coronavirus in 2020. are.
“The increased costs and lack of federal and state reimbursement have placed entities like the debtor in a difficult position,” Goldner wrote. “In Missouri, for example, there was zero government reimbursement for GCM facilities.”
Late last year, the Centers for Medicare and Medicaid Services terminated Goldner-owned Viviant Healthcare in Bristol, Tennessee, from the Medicare program. This was followed by the transfer of two other buildings in Goldner's Vivant portfolio to Ensign Group through state-led receivership.
At the time, Nursinghomedatabase.com reported that the trust had at least 5% ownership in 14 facilities in six states, but various news outlets said many were hanging by a single thread. .
Mr. Goldner himself is the subject of several lawsuits, including one filed last month by a former partner in GCM's captive insurance company, which insures nursing homes and other businesses.
A “Trojan horse” plan?
Mr. Goldner said in his Oct. 2 bankruptcy filing that the primary loss was due to a loan of more than $20 million secured by the Missouri-based entity from Capital Source, a Capital Foresight unit. He alleges that Foresight's managers engaged in a fraudulent Trojan horse in which they leased or sublet 20 properties and immediately stopped paying rent, which led to the lending company The company was able to seize GCM's assets and “monopoly own the entire corporate value of GCM.”
Mr. Goldner said the operator first repaid the loan rather than meet its rent obligations to GCM, and as a result lost its purchase option with Omega for 11 properties valued at between $42.6 million and $60.35 million. I'm writing.
“Capital Foresight's collaborative efforts are uniquely bold and audacious when viewed through the lens of integrity and fair dealing,” Goldner wrote.
Calls to a phone number listed with Capital Foresight in California went unanswered Tuesday.
Mr. Goldner's statement is complex and reflects the types of transactions commonly seen between related parties and private equity investors. Although the Biden administration has been highly critical of its involvement in the nursing home sector, federal data shows the prevalence has fallen from 8% to 5% since 2018.
Sam Brooks, director of public policy for The National Consumer Voice for Quality Long-Term, tracks private equity deals in the skilled nursing sector. He said he was not surprised to learn of the bankruptcy filing.
“PE (companies) are not in the nursing home space to provide quality care. They're going to be profitable within five to seven years,” Brooks said. “They are taking advantage of the lack of transparency that most commercial operators have, but to a much greater extent.
“Bankruptcy is probably just their exit strategy,” he added. “In the meantime, thousands of residents could be languishing in nursing homes.”
Last summer, Consumer Voice featured Mr. Goldner's business practices in response to requests from the Department of Justice, Department of Health and Human Services, and Federal Trade Commission for examples of “corporate greed” in the health care sector.
The company cited unpaid vendors in the wake of the GCM shutdown, including Missouri, where the company “failed to pay hundreds of thousands of dollars to vendors, resulting in numerous lawsuits.”
Goldner last week sought to write off these debts as a result of improper transactions with Capital Foresight, saying the lender's actions were “triggering an avalanche of other defaults to third parties.” insisted.
He said the company and its subsidiaries intend to “rebuild the business” and “seek all appropriate remedies” against Capital Foresight and the leaders involved in the sublease.
“The debtor, with the protection of this court and bankruptcy;
Codes allow you to protect your remaining assets and maximize the value of your property to creditors.
and propose a meaningful, feasible, and verifiable restructuring plan,” he wrote.
More legal and financial issues
But bankruptcy isn't Goldner's only legal challenge. The company is being sued for unpaid skilled nursing facility obligations, and Mr. Goldner could be sued for large compensatory and punitive damages for the insurance company debacle.
After being first targeted themselves, two Sherbrooke Corporate executives filed suit in North Carolina Superior Court, claiming they were running the business like any other business owner. .
“Defendant Goldner's business pattern is to raise large amounts of capital, purchase assets, leverage the time and energy of vendors, and refuse to pay invoices as they fall due,” they wrote. are. “Defendants are indebted to Mr. Sherbrooke for not only refusing to pay $5,808,326.38 in insurance premiums, leading to the company's bankruptcy and closure, but he also wrongly seized control of the company's business and left the remaining unresolved intentionally failed to manage claims.”
They said the judgment requiring Defendants Goldner to pay approximately $500,000 to ShiftMed was based on “loan defaults, various breaches of contract, various types of defaults, and It was one of more than a dozen rulings involving “disputes.” They said he “owes at least $50 million to third parties for all known breaches of contract and lawsuits against him.”
Plaintiffs in the insurance captive lawsuit are asking the court to remove Mr. Goldner as a director and hold him accountable for the profits he earned while running the company.
Goldner said in GCM's bankruptcy filing that once the company's management fees are paid, there will be no funds left to pay unsecured creditors.
