BAPCPA Health Care Lenders Beware

Journal Issue

Dec/Jan 2005

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Citation

ABI Journal, Vol. XXIV, No. 10, p. 32, December/January 2006

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With the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005 (BAPCPA), the Bankruptcy Code for the first time
adopts specific health care bankruptcy provisions. In doing so, it may,
along with certain other more general amendments, have a significant
effect not only on health care providers but their lenders and unsecured
creditors, who may find their positions further compromised. In
particular, in structuring, booking and working out loans to health care
entities, lenders may need to consider or factor in whether BAPCPA
creates significant new priority claims that could prime their loan
positions or threaten the value of their collateral in receivables and
other assets. As a result, lenders may consider (1) the advisability of
taking liens on more property that would not be primed by the new
priority claims, (2) adjusting borrowing bases and (3) accepting and
even encouraging more out-of-court restructurings—including leaving
something on the table—to the extent a health care bankruptcy may
have been made a "less" attractive alternative by BAPCPA.This column
highlights five issues raised by BAPCPA that may be of particular
interest to health care lenders and other creditors and will likely have
an impact on collateral collection and values and/or amounts available
for recoveries for health care lenders and general unsecured creditors:
(1) the scope of the role of the patient care ombudsman to be appointed
in health care business bankruptcies and the attendant administrative
costs relating to that role, (2) the impact of other potentially
significant additional administrative expenses imposed by BAPCPA,
particularly relating to patient record retention and patient transfers,
(3) the effect on receivables of a new exception to the automatic stay
granted to the Department of Health and Human Services, (4) the effect
of provisions of BAPCPA relating to personal bankruptcies on health care
providers' self-pay patient receivables, and (5) the impact of the
BAPCPA requirement that nonprofit entities comply with any applicable
nonbankruptcy laws when transferring assets pursuant to a §363 sale
or a plan.<h4>Increased Procedural Requirements and Administrative
Expenses</h4>1. Patient Care Ombudsman. Section 1104 of BAPCPA
(through new §333 of the Code) requires the appointment of a
disinterested patient care ombudsman to monitor the quality of patient
care provided by a health care business<a href="#2" name="2a">2</a> in bankruptcy and to represent the
interests of the patients of the health care business unless the court
finds that the appointment of such ombudsman is not necessary under the
specific facts of the case. The U.S. Trustee is to appoint the patient
care ombudsman within 30 days after the commencement of the bankruptcy
(although the U.S. Trustee may not appoint itself ombudsman). If the
debtor is a health care business that provides long-term care, then the
U.S. Trustee may select the State Long-Term Care Ombudsman appointed
under the Older Americans Act of 1965 for the state in which the case is
pending to serve as the patient care ombudsman.<a href="#3" name="3a">3</a> The Interim Rules for implementing the
provisions of BAPCPA relating to health care businesses issued and
modified by the Advisory Committee on Bankruptcy Rules of the Judicial
Conference of the United States provide that even if the court has
previously determined that the appointment of a patient care ombudsman
is not necessary or has previously terminated the appointment of a
patient care ombudsman, the court, on a motion by the U.S. Trustee or
any party in interest, may order the appointment of a patient ombudsman
at any time during a case if the court finds that the appointment of a
patient ombudsman has become necessary.<a href="#4" name="4a">4</a>BAPCPA requires the patient care
ombudsman to monitor the quality of patient care provided to patients of
the health care business to the extent necessary under the
circumstances, including interviewing patients and
physicians.<a href="#5" name="5a">5</a> Every
60 days at a hearing or in writing and after notice to the parties in
interest, the ombudsman must report to the court regarding the quality
of patient care provided to patients of the debtor. If the ombudsman
determines that the quality of patient care provided to the debtor's
patients is declining significantly or is otherwise being materially
compromised, the ombudsman must file with the court a motion or written
report, with notice to the parties in interest, immediately upon making
such determination.<a href="#6" name="6a">6</a> The experience of the state ombudsmen
appointed pursuant to the Older Americans Act of 1965<a href="#7" name="7a">7</a> may serve as a guide of sorts
for patient care ombudsmen in carrying out their responsibilities under
BAPCPA.<a href="#8" name="8a">8</a> BAPCPA,
however, does not establish any standards by which the patient care
ombudsman is to evaluate the quality of patient care.BAPCPA also
provides that the patient care ombudsman is to be compensated as a
"professional person" by the debtor-in-possession (DIP) or trustee
pursuant to §330(a)(1) of the Code.<a href="#9" name="9a">9</a> While there is no specific provision
allowing the patient care ombudsman to hire counsel or other
professionals, the retention and payment of professionals will likely
prove to be essential if the ombudsman is to be successful in monitoring
the impact of the entire bankruptcy process on patient care. There is
also no specific guidance as to any exposure to or protections
(including immunity or indemnification) for the patient care ombudsman
in relation to monitoring the quality of health care services. Given the
rather open-ended nature of the patient care ombudsman's role, debtors
and trustees could incur substantial administrative expenses relating to
the compensation of the ombudsman and its professionals, the expenses
relating to the performance of the ombudsman's duties (including giving
notice, interviewing patients, etc.), and the expenses associated with
addressing or implementing any of the ombudsman's recommendations with
respect to patient care that might be ordered by the court. (While
health care debtors and lenders may give serious consideration to
attempting to demonstrate to the bankruptcy court that the parties in
interest are sufficiently focused on patient issues that the appointment
of an ombudsman is unnecessary, the success of such an argument is open
to question.)2. Increased Administrative Expenses. BAPCPA
creates other administrative expense priorities that could further
compromise the collateral position of lenders and creditors. In
particular, BAPCPA grants administrative expense priority to the actual
and necessary costs and expenses of closing a health care business
whether incurred by a trustee, federal agency, or department or agency
of a state or political subdivision, including the costs and expenses of
disposing of patient records and the costs and expenses of transferring
of patients.<a href="#10" name="10a">10</a>These additional expenses may be
significant. With respect to the transfer of patients, BAPCPA
requires and arguably creates a duty for a trustee or debtor to use all
reasonable and best efforts to transfer patients from a health care
business that is in the process of being closed to an appropriate health
care business that (a) is in the vicinity of the health care business
that is closing, (b) provides services that are substantially similar to
those provided by the health care business that is in the process of
being closed and (c) maintains a reasonable quality of
care.<a href="#11" name="11a">11</a>

Similarly, while BAPCPA's provision for the disposal of patient
records may arguably be intended to relieve the estate of the cost
of retaining those records, the procedures for disposing of patient
records either by turning them over to patients or their insurers,
depositing them with an appropriate federal or state agency, or
destroying them, may result in additional expense to the estate. BAPCPA
requires that the trustee or debtor publish a notice at least 365 days
in advance of its intent to destroy patient records, send notice during
the first 180 days of the one-year period to each patient or his/her
appropriate insurance carrier directly regarding the claiming or
disposal of the patient's records, and make a written request to each
appropriate federal agency to accept deposit of any unclaimed records.
The trustee may then destroy any unclaimed patient records for which an
appropriate federal agency has not granted a request to deposit the
records.<a href="#12" name="12a">12</a> The
Interim Rules require that the court approve the form of any notice of
intent to dispose of patient records. The Interim Rules also require
that the debtor or trustee file a report no later than 30 days after the
destruction of patient records certifying that the unclaimed records
have been destroyed and explaining the method used to effect
destruction.These combined additional administrative expenses would
seem to make bankruptcy a more costly and arguably less-attractive
option for health care entities and their unsecured creditors. Faced
with the possibility of substantially larger carve-outs to pay for
additional administrative expenses, health care lenders may favor an
orderly out-of-court liquidation to bankruptcy.<h4>Limits to Collections
and Collateral Value</h4>Other provisions of BAPCPA relating to
health care businesses in bankruptcy may pose additional challenges to
cash flows available to operate the health care business and to
collateral and/or recoveries for lenders and creditors.3.
Exception to the Automatic Stay for HHS. Section 1106 of BAPCPA
provides an exception to the automatic stay under Code §362 by
permitting the Secretary of Health and Human Services (HHS) to exclude a
debtor from participation in the Medicare program or any other federal
health care program (as defined in §1128B(f) of the Social Security
Act).<a href="#13" name="13a">13</a> The
amendment, in addition to threatening a provider with the loss of all
future Medicare payments, is intended to make it harder for Medicare
providers to avoid penalties and repayment of pre-petition Medicare
overadvances by declaring bankruptcy. Through its power to exclude a
provider from the Medicare program, BAPCPA gives to HHS a greater power
to also compel recoupment and/or set off against pre-petition
overpayments.<a href="#14" name="14a">14</a>

These changes may also have the effect of squeezing health care
providers at the beginning of a case and ultimately denying those
receivables to health care entities and their creditors, including
particularly lenders who may have a collateral interest in such
receivables.4. Self-pay Patient Receivable Collections and
Collateral. As consumer-focused legislation on the one hand, BAPCPA
is generally viewed as making it more difficult for individuals
(including those with health care debts) to avoid their debts through
discharge in bankruptcy, thereby theoretically or potentially reducing
patient bankruptcy filings and related chargeoffs while increasing
collections;<a href="#15" name="15a">15</a> on
the other hand, certain provisions of BAPCPA may also put some limited
pressure on health care providers (and creditors generally) to
compromise their claims and thus may negatively impact patient
receivables collateral. One provision in particular, designed to promote
alternative dispute resolution, provides that an unsecured creditor may
have its claim reduced by up to 20 percent if an approved nonprofit
budget and credit counseling agency proposes an alternative repayment
plan in which the consumer-debtor agrees to pay at least 60 percent of
that creditor's debt during the term of the loan (or any reasonable
extension thereof) and that creditor unreasonably refuses to negotiate
that repayment plan. The alternative payment plan must be offered at
least 60 days before the filing of a bankruptcy petition, and no part of
the debt can be nondischargeable.<a href="#16" name="16a">16</a> Further language in BAPCPA indicates
that the debtor (here the patient) has the rather high burden of proving
by clear and convincing evidence that (1) the creditor unreasonably
refused to consider the debtor's proposal and (2) the proposed
alternative repayment schedule was made prior to the expiration of the
60-day period.<a href="#17" name="17a">17</a>
It is unclear whether a creditor that negotiates but does not accept a
repayment plan will be subject to a motion to reduce its claim.While
self-pay collections may not be the most significant collectibles or
collateral in a health care bankruptcy, particularly when combined with
new protections given to secured consumer lenders,<a href="#18" name="18a">18</a> these provisions can further
limit collections and claims against self-pay patient
receivables.5. Nonprofit Health Care Business Sales. Finally,
new requirements relating to the sale or transfer of assets by nonprofit
entities may affect the ability of debtors and creditors to realize the
full value of collateral in facilities and related real property in
nonprofit health care bankruptcies. Section 1221 of BAPCPA (effective as
of April 20, 2005) requires that when a nonprofit entity sells assets
pursuant to §363 of the Code or transfers assets pursuant to a
plan, such sale or transfer of assets must comply with applicable
nonbankruptcy law governing the transfer of property by
nonprofits.<a href="#19" name="19a">19</a> The
same section of BAPCPA also grants the attorneys general of the states
in which a nonprofit entity is incorporated and does business standing
to be heard in the bankruptcy court on issues relating to sale and
transfer of assets.<a href="#20" name="20a">20</a> BAPCPA is not to be construed to require
the approval of any other court for the transfer of property by a
nonprofit entity.<a href="#21" name="21a">21</a>Under the old law, it was unclear
whether nonprofit debtors needed to obtain only the approval of the
bankruptcy court for a sale transaction, or whether nonprofit debtors
also needed to comply with otherwise applicable nonbankruptcy law. Some
courts permitted nonprofit debtors to transfer assets through a
§363 sale without complying with state laws and regulations, even
over the objection of state attorneys general and regulators, while
other courts required compliance with both the Code and applicable
nonbankruptcy law.<a href="#22" name="22a">22</a> While BAPCPA appears to offer some
clarity on the question of whether compliance with applicable
nonbankruptcy law is required and makes clear that a trustee or debtor
need not obtain the approval of any court other than the bankruptcy
court for the transfer of property by a nonprofit debtor, nonprofit
health care debtors will likely find disposing of property more
difficult, particularly if one or more state attorneys general oppose
the sale or transfer of property or insist on compliance with applicable
nonbankruptcy law, including such things as increased notice and the
opportunity for public comment on any proposed sale, and restrictions on
(and possible objections to) the transfer of assets based on theories of
charitable trust, including whether the proposed sale is consistent with
or the best alternative to meet the original charitable mission of the
health care entity. In addition, compliance with additional applicable
nonbankruptcy laws when selling or transferring assets could not only
impede highest-and-best-offer sales, but may result in additional
administrative costs to the estate.<h4>Conclusion</h4>While health
care lending has not been turned on its head, some of the rules have
been affected by BAPCPA. For health care providers, their lenders and
unsecured creditors, the consumer provisions of BAPCPA mandating credit
counseling, establishing a means test for determining debtors'
eligibility for chapter 7 and the amount of income available to pay
unsecured creditors under chapter 13 plans, preventing serial or repeat
filings, limiting the use of the homestead exemption, and making
dismissal of cases easier for failure to file certain documents
(including tax returns) offer the possibility that providers will
experience fewer patient bankruptcy filings and chargeoffs, and less
erosion of patient receivables collateral—although that possibility
is somewhat tempered by other provisions of BAPCPA that require
creditors to negotiate their claims with would-be debtors prior to
bankruptcy or face a possible 20 percent reduction of their claims in a
bankruptcy proceeding and that grant additional protections to secured
creditors and establish new claim priorities. On the other hand, and
probably more important to health care lenders, BAPCPA gives to HHS a
powerful new tool for squeezing health care entities in bankruptcy and
compelling recoupment of pre-petition Medicare overadvances, thereby
potentially impacting receivables collateral. Further, BAPCPA's
provisions relating to the appointment of a patient care ombudsman and
granting administrative priority to expenses relating to closing a
health care facility in bankruptcy may significantly increase
administrative costs, while the provisions requiring compliance with
applicable nonbankruptcy law in the sale or transfer of property may
affect the ability to realize fully the value of collateral.In light
of these amendments, lenders, when structuring their loans, may
consider, among other things, the advisability, if possible, of taking
more collateral, which should prime new administrative claims, adjusting
their borrowing bases and enhancing their monitoring of collateral.
Further, in working out problem health care loans, lenders will need to
consider the new costs and arguable impediments to collateral value
created by BAPCPA in formulating negotiating strategies and gauging
their appetite for allowing bankruptcies or pushing instead for
out-of-court resolutions—even if it requires leaving some value on
the table for other
constituencies.<hr><h3>Footnotes</h3><a name="1">1</a> Harold L. Kaplan is chairman of Gardner
Carton & Douglas LLP, where he is also co-chair of the Corporate
Restructuring and Financial Institutions Practice Group. He can be
reached at 191 North Wacker Drive, Suite 3700, Chicago, IL 60606-1698,
(312) 569-1204, (312) 569-3204 (fax), hkaplan@gcd.com. <a href="#1a">Return to article</a><a name="2">2</a> Section 1101 of BAPCPA defines a "health
care business" as any public or private entity (either for-profit or
not-for-profit) that is primarily engaged in offering to the general
public facilities and services for (1) the diagnosis or treatment of
injury, deformity or disease and (2) surgical, drug treatment,
psychiatric or obstetric care. A health care entity may include any (a)
general or specialized hospital, (b) ancillary ambulatory, emergency or
surgical treatment facility, (c) hospice, (d) home health agency, (e)
any similar entity and (f) any long-term care facility, including any
skilled nursing facility, intermediate care facility, assisted living
facility, home for the aged, domiciliary care facility and health care
institution that is related to any of the foregoing facilities if that
institution is primarily engaged in offering room, board, laundry or
personal assistance with activities of daily living and incidentals to
activities of daily living. BAPCPA, Pub. L. 109-8, §1101(a),
§101 27(A), 119 Stat. 23, 189. <a href="#2a">Return to
article</a><a name="3">3</a> BAPCPA
§1104(a), §333(a), 119 Stat. at 191-192. <a href="#3a">Return
to article</a><a name="4">4</a> The Interim
Rules are available at <a href="http://www.uscourts.gov/rules">http://www.uscourts.gov/rules</a>.

<a href="#4a">Return to article</a><a name="5">5</a> BAPCPA §1104(a), §333(b)(1), 119
Stat. at 191. <a href="#5a">Return to article</a><a name="6">6</a> BAPCPA §1104(a), §§333(b)(2)
and 333(b)(3), 119 Stat. at 192. <a href="#6a">Return to
article</a><a name="7">7</a> 42 U.S.C.
§3001, et seq. (2005). <a href="#7a">Return to
article</a><a name="8">8</a> Among other
things, the state ombudsmen (1) identify, investigate and resolve
complaints made by or on behalf of residents and providing services to
protect the health, safety, welfare and rights of residents, (2)
represent the interests of residents before governmental agencies, (3)
seek administrative, legal and other remedies to protect residents, (4)
analyze, comment on and monitor the development and implementation of
federal, state and local laws, regulations and other governmental
policies and actions that pertain to the health, safety, welfare and
rights of residents, and (5) recommend changes in the law and facilitate
public comment on laws and regulations. See 42 U.S.C.
§§3058(g)(a)(3)(A), (C), (D), (E), (G)(i) and (G)(ii). <a href="#8a">Return to article</a><a name="9">9</a> BAPCPA §1104(b), §330(a)(1), 119
Stat. at 192. <a href="#9a">Return to article</a><a name="10">10</a> BAPCPA §1103, §503(b)(8), 119
Stat. at 190-191. <a href="#10a">Return to article</a><a name="11">11</a> BAPCPA §1105, §704(a)(12), 119
Stat. at 192. <a href="#11a">Return to article</a><a name="12">12</a> BAPCPA §1102, §351, 119 Stat.
at 190. <a href="#12a">Return to article</a><a name="13">13</a> BAPCPA §1106, §362(b)(28), 119
Stat. at 192. Citing the exception to the automatic stay contained in
§362(b)(4) for the exercise of police or regulatory powers, HHS has
regularly sought to enforce various Medicare regulations or statutes
against debtors, including suspension and exclusion from the Medicare
program. Some bankruptcy courts, however, relying on §105 of the
Code, have granted injunctive relief to debtors enjoining HHS from
enforcing Medicare regulations or statutes in an effort to improve a
debtors' ability to reorganize. See, e.g., Richmond Paramedical
Servs., Inc. v. United States (In re Richmond Paramedical Servs.
Inc.), 94 B.R. 881 (Bankr. E.D. Va. 1988), aff'd., 1989 WL
149144 (E.D. Va. May 17, 1989). Given the fact that bankruptcy courts
have generally declined to exercise their equitable powers under
§105 where other, particularized provisions of the Code impede the
requested exercise of such powers (see, e.g., In re Ludlow Hospital
Society Inc., 124 F.3d 22, 28 (1st Cir. 1997)), new §362(b)(28)
may make the issuance of injunctions against HHS exclusion actions less
likely. <a href="#13a">Return to article</a><a name="14">14</a> The issue of HHS's right to recoup
pre-petition overpayments against its post-petition Medicare payment
obligations has been hotly contested and discussed for years. The
leading case denying recoupment is In re University Medical
Center, 973 F.2d 1065 (3d Cir. 1992). For cases allowing recoupment,

see, e.g., United States v. Consumer Health Healthcare Services of
America, 108 F.3d 390 (D.C. Cir. 1997); TLC Hospitals Inc. v.
HHS, 224 F.3d 1008 (9th Cir. 2000); In re Holyoke Nursing Home
Inc., 273 B.R. 305 (D. Mass. 2002), aff'd. in unpublished
opinion (D. Mass.), aff'd., 372 F.3d 1(1st Cir. 2004); In
re Slater Health Center Inc., 294 B.R. 423 (Bankr. D. R.I. 2003),

rev'd., 306 B.R. 20 (D. R.I. 2004), aff'd., 398 F.3d 98
(1st Cir. 2005). <a href="#14a">Return to article</a><a name="15">15</a> Among the provisions of BAPCPA that may
improve patient receivable collections and thus give some comfort to
lenders and unsecured creditors are: (1) new provisions making mandatory
credit counseling a condition both for filing for bankruptcy protection
and for receiving a discharge of debts through bankruptcy as a way of
encouraging alternatives to bankruptcy, BAPCPA §106(a) and (b),
§§727(a) and 109(h), 119 Stat. at 37-38; (2) new means-testing
provisions to be used in establishing a debtor's eligibility for chapter
7, BAPCPA §102, §707(b), 119 Stat. at 27-35, and, in
determining the amount available to repay unsecured creditors in chapter
13 cases, BAPCPA §102(h), §1325(b), 119 Stat. at 33-34; (3)
preventing or reducing serial (repeat) filings by, among other things,
increasing the time that must elapse before the same debtor may receive
a second chapter 7 discharge and limiting the ability of a chapter 13
debtor to receive a discharge if the same debtor has received a chapter
13 discharge within the previous two years or a chapter 7, 11 or 12
discharge within the previous four years, BAPCPA §312,
§§727(a)(8) and 1328, 119 Stat. at 86-87; (4) making it easier
for courts to dismiss chapter 7 and chapter 13 cases, especially if
debtors fail to produce certain documents, including federal income tax
returns, BAPCPA §316, §521(i), 119 Stat. at 92; and (5) making
it more difficult for debtors to take advantage of the more generous
homestead exemptions that are available in some states by, among other
things, establishing longer residency requirements, BAPCPA §307,
§522(b), 119 Stat. at 81, and BAPCPA §322, §522(p), 119
Stat. at 96; and capping the value of a homestead exemption if the
debtor has been convicted of a felony and the bankruptcy filing appears
to be abusive or if the debtor owes debts arising from violations of
federal or state securities laws and certain other types of wrongdoing,
BAPCPA §322, §522(q), 119 Stat. at 97. <a href="#15a">Return
to article</a><a name="16">16</a> BAPCPA
§201, §502(k), 119 Stat. at 42. It is unclear whether the new
provision applies to any unsecured debt or only to debts with a specific
term (i.e., loans). <a href="#16a">Return to
article</a><a name="17">17</a> BAPCPA
§201, §502(k), 119 Stat. at 42. <a href="#17a">Return to
article</a><a name="18">18</a> Among the
additional protections granted to secured consumer lenders under BAPCPA
§306(b) can be expected to benefit secured creditors by preventing
lien-stripping in certain situations in chapter 13 cases whereby a
creditor's allowed secured claim is reduced to the value of the
collateral (rather than the outstanding amounts due under the loan) and
the creditor is entitled to an unsecured deficiency claim for the amount
by which the total claim exceeds the value of the collateral. BAPCPA
§306(b), §1325(a), 119 Stat. at 80. Under §327 of BAPCPA,
in individual chapter 7 and 13 cases, the value of an allowed claim
secured by personal property is now to be determined based on the
replacement value of such property as of the petition date without
deduction for sales or marketing costs. BAPCPA §327, §506(a),
119 Stat. at 99-100. By mandating the use of the "replacement-value"
standard, BAPCPA gives an advantage to secured creditors in redemption
and cramdown situations. The replacement value of collateral, which the
Supreme Court in Associates Commercial Corp. v. Rash, 520 U.S.
953, 959 n. 2 (1997), defined as the price a willing buyer in a debtor's
trade, business or situation would pay a willing seller to obtain
property of like age and condition, is generally higher than what the
creditor could realize in foreclosing on the collateral (the
"foreclosure-value" standard). Moreover, with respect to property
acquired for personal, family or household purposes, BAPCPA defines
"replacement value" as the price a retail merchant would charge for
property of that kind considering the age and condition of the property
at the time value is determined. BAPCPA §327, §506(a), 119
Stat. at 99-100. <a href="#18a">Return to article</a><a name="19">19</a> BAPCPA §1221(a), (b) and (c),
§§363(d), 1129(a) and 541(f), 119 Stat. at 195-196. <a href="#19a">Return to article</a><a name="20">20</a> BAPCPA §1221(d), 119 Stat. at 196.

<a href="#20a">Return to article</a><a name="21">21</a> BAPCPA §1221(e), 119 Stat. at 196.
<a href="#21a">Return to article</a><a name="22">22</a> For an example of a case approving an
asset sale by a nonprofit health care entity in which the bankruptcy
court held that applicable nonbankruptcy law was preempted by federal
bankruptcy law, see Georgia International Health Alliance Inc., et
al. v. Thurbert E. Baker, Attorney General, State of Georgia, (In re
Georgia International Health Alliance Inc., et al.), Adv. Pro. No.
00-6196 (Bankr. N.D. Ga. Feb. 14, 2001) ("Order"). See, also, In re
WBQ Partnership, 189 B.R. 97 (Bankr. E.D. Va. 1995), in which the
bankruptcy court approved the sale of assets by a health care entity
over the objection of the state's Department of Medical Assistance
Services. For the view that a sale of assets by a nonprofit health care
entity requires deference to state regulators in addition to approval by
the bankruptcy court, see In re United Healthcare System Inc.,
No. 97-1159, 1997 U.S. Dist. WL 176574, at 10 (D. N.J. Mar. 26, 1997)
("The court recognizes that by binding the bankruptcy court to certain
state laws and state agency decisions, the bankruptcy court may be
hindered in achieving the highest price for the bankruptcy estate's
assets"). <a href="#22a">Return to article</a>

Journal Authors

Harold L. Kaplan

Journal Date

Thursday, December 1, 2005 - 12:00

Bankruptcy Rule

2005