In re: The Phoenix Rehabilitation Center, Inc.
United States Bankruptcy Court for the
District of Kansas, Topeka Division,
Case No. 97-41334-11
The Phoenix Rehabilitation Center, Inc. is a Kansas not-for-profit
corporation which owned The Phoenix Nursing & Rehabilitation
Center, a 235 licensed bed skilled nursing facility located in Olathe,
Kansas. Tutera provided post-petition management and consulting
services, as well as a debtor in possession loan in the total amount
of $150,000, to the owner as a part of its chapter 11 bankruptcy
proceeding. At the time that the chapter 11 bankruptcy was filed,
the facility was the subject of a decertification proceeding and its
Medicaid provider
agreement was set to terminate.
Upon receiving the approval of the Bankruptcy Court, Tutera
immediately placed several of its own highly qualified on-staff
professionals at the facility to begin addressing the numerous
deficiencies previously cited by the Kansas Department
of Health &
Environment (“KDHE”) prior to the bankruptcy.
However,
notwithstanding the best efforts of Tutera, KDHE
ultimately
determined that the facility could not be brought into
substantial
compliance based upon the deficiencies which existed prior to the
filing of the chapter 11 case. Tutera thereafter agreed to oversee
and finance the closing of the facility in accordance with applicable
law, which was accomplished in conjunction with Tutera’s purchase
of the first
mortgage loan in the approximate amount of $4,450,000
which was held against the facility.
Following the closure of the facility, Tutera actively assisted
the
owner and the other two (2) junior mortgage holders in
marketing
the facility for an auction sale conducted by the
Bankruptcy Court,
at which time Tutera
purchased the facility pursuant to a credit bid
which was
submitted in accordance with 11 U.S.C. § 363(k) in an
amount
equal to the first mortgage note which had been previously
purchased by Tutera. Tutera has subsequently leased this facility
to a not-for-profit corporation affiliated with the Catholic
Church,
who is currently operating the facility.