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.

Texas-Based Debtor Stays Bound by Delaware Venue's Gravity

By Stephen W. Sather

Barron & Newburger, P.C.

Austin, TX

 

The bankruptcy case of Texas restaurant chain Black-Eyed Pea will remain in Delaware after the Bankruptcy Court found that it would be too costly to move the case to the district where its operations are based.  In doing so, the Court found that the interests of the largest creditors outweighed the interests of the more numerous Texas-based creditors.     In re Restaurants Acquisition I, LLC d/b/a Black-Eyed Pea, Case No. 15-12406 (D. Del. 3/4/16).   The opinion can be accessed here.

About the Debtor

The Debtor is a Delaware limited liability company.   Prior to bankruptcy, the Debtor operated thirty restaurants, all located within Texas.   However, by the petition date, it had slimmed down to just twelve stores.    The Debtor employed approximately 530 employees and staff, all but four of whom reside in Texas.   However, the Debtor's management is located in Hendersonville, Tennessee.    

This was not a particularly large case.   The Debtor reported assets of $7.5 million and liabilities of $14.7 million.    The Debtor's secured lenders consisted of CNL Financial Group, which is located in Florida, AmEx Bank located in Salt Lake City and CFG XV, Inc. located in Florida.   Sixty-five percent of the creditors on the list of 20 largest unsecured creditors were located in Texas.    The Debtor owed the State of Texas somewhere between $200,000 and $4 million based on a tax audit.   If the audit was resolved in the State's favor, it would be the single largest creditor in the case.    

Impressions of Capitol Hill

By Stephen W. Sather

Barron & Newburger, P.C.

Austin, TX

Growing up, I remember hearing “I’m just a bill, sitting on Capitol Hill” on Schoolhouse Rock.   In college, I was a political science major.    However, I had never actually gone to Washington to try to influence the legislative process.    That all changed on Leap Day, February 29, when I participated in the Commercial Law League’s Hill Day.

A group of thirteen of us from Texas, California, Minnesota, North Carolina, Idaho, Delaware and Iowa met in Washington to advance three of the League’s legislative agenda items.  One of the things that sets the Commercial Law League apart from some of its peers is that it takes positions on legislative issues as well as filing amicus briefs in cases.    Our group focused on bankruptcy venue reform, preference reform and FDCPA reform.   I was part of the venue team.

Texas Judge Fires Shots on Venue

By Stephen W. Sather
Barron & Newburger, P.C.
Austin, TX

Come back to Texas
It's just not the same since you went away
Before you lose your accent
And forget all about the Lone Star State
There's a seat for you at the rodeo
And I've got every slow dance saved
Besides the Mexican food sucks north of here anyway

--Ohio (Come Back to Texas) by Bowling for Soup


Texas Bankruptcy Judge Russell Nelms has authored a thoughtful opinion on venue and a challenge to Texas companies who file in far off forums.  No. 15-41545, The Crosby National Golf Club, LLC (Bankr. N.D. Tex. 8/3/15).

The Case At Hand

The case in front of Judge Nelms involved a San Diego golf course that was having difficulties with the gated communities which surrounded it.   The company's management was based in Ft. Worth which is where the case was filed.   One of the homeowners' associations moved to transfer venue while the Debtor and its Texas-based bank sought to keep the case in Texas.