Delaware Judge Swiftly Transfers Hospital Case

By Stephen W. Sather

ssather@bn-lawyers.com

Barron & Newburger, P.C.

Austin, TX

I recently wrote about a case that could not escape Delaware's gravity here.   However, a new decision from Judge  Laurie Selber Silverstein shows that it is possible to gain a transfer of venue out of The First State.    Case No. 17-10201, In re LMCHH PCP, LLC (Bankr D. Del).     

The case involved two jointly administered entities.   Louisiana Medical Center and Heart Hospital, LLC operated a hospital in Lacombe, Louisiana near New Orleans.   LMCHH PCP, LLC was the entity formed as a Physicians Group.   The hospital saw a surge in business after it was spared by the surging waters of Hurricane Katrina.  Unfortunately, when the hospital underwent a $40 million expansion, it could not cover its cost of operations.  When it could not locate a buyer outside of bankruptcy, it chose to file chapter 11.

The Debtors filed their petitions on January 31, 2017.    Two days later, on February 2, 2017, McKesson Corporation filed a Motion to Transfer Venue.   The Motion stated that  

This Court should transfer venue to the Louisiana Court because it is in the best interests of patients and the other stakeholders to have the local bankruptcy court handle the wind down, closure and potential sale/liquidation of this single hospital located in Lacombe, Louisiana. In single-location hospital and healthcare bankruptcy cases, the local bankruptcy court always is the best venue to oversee the myriad of issues that arise in these types of healthcare bankruptcy cases.

California State Court Rules That Released Parties Remain Liable For A Settlement Payment That Is Later Deemed To Be A Preferential Transfer And Is Disgorged From The Creditor

By Peter Califano

pcalifano@cwclaw.com

Cooper, White & Cooper, LLP

San Francisco, CA

In Coles v Glaser, 2 Cal. App. 5th 384 (2016), plaintiff Kevin Coles threatened a collection action against defendant Cascade Acceptance Corporation and defendant guarantors Barney Glaser and Fred Taylor on a loan past due.  Cascade informed Coles that it could not pay and would be unlikely to pay in the foreseeable future, resulting in a lawsuit for the unpaid loan balance and other amounts.  After being served with the complaint, Cascade wired approximately $309,000 and a settlement agreement was signed where Glaser and Taylor were released on all claims "except for obligations arising under the settlement agreement."  A week after the lawsuit was dismissed, Cascade filed bankruptcy.  The bankruptcy trustee later sued Coles for the return of the settlement payment as a preferential transfer.  Eventually, the parties compromised the claim and most of the settlement was paid over to the trustee.  Coles filed a claim in Cascade's bankruptcy case but only received a small dividend, leaving him with a significant shortfall.  Coles then sued Glaser and Taylor in state court for damages and, after a one-day bench trial, the trial court ruled in Coles' favor.  Glaser and Taylor appealed, claiming that the settlement agreement was fully performed because Cascade had paid the underlying obligation and that the guarantors received a release.