Elderly Care Facility Emerges from Bankruptcy With New Capital

September 30th, 2013

Macdonald Fernandez LLP brings an embattled residential care facility for the elderly (RCFE) out of bankruptcy with more than $1.3 million in new court-approved financing.

The Company:
A Walnut Creek residential care facility for the elderly (RCFE).

The Problem:
The company's senior secured loan matured in 2012, after which it was sold to an aggressive claims buyer who attempted to foreclose. The title company would not close escrow on a takeout loan because there were possible claims by third parties, including the IRS, the County of Contra Costa, the Franchise Tax Board, the Employment Development Department and others.

The Solution:
Macdonald Fernandez LLP brought a lawsuit in bankruptcy court against the IRS, the County of Contra Costa, the Franchise Tax Board, the Employee Development Department and others. We prevailed; in fact, most of the defendants stipulated to a judgment. After title was clear, we obtained bankruptcy court approval of $1.3 million in new senior secured financing, and were able to craft a creative and strong order closing the bankruptcy case and preserving all judgments against third parties.

The Impact:
The facility avoided foreclosure and continued to operate with no interruption. The company emerged from contentious and uncertain circumstances to return to profitability.

The Client Testimonial:
"We are truly grateful to you and your staff for all the help you have provided to us during the bankruptcy. You truly are our 'answered prayer.' We couldn't be more lucky to have you as our bankruptcy counsel. Your entire team really made the entire process less stressful for us. Thank you very much for taking such good care of us. From the bottom of our hearts, thank you!"