Hixson-based nursing home operator New Beginnings Care recently saw the state of Ohio shut down its Youngstown, Ohio, nursing home and one in Warren, Ohio, after inspectors cited "deficiencies" at them, including that the Youngstown facility was understaffed because workers quit over not being paid and patients' adult diapers were saturated with urine and feces.
New Beginnings Care still owes Ohio unpaid bed taxes at the two facilities - but doesn't plan to pay, the nursing home operator's attorney David Fulton said Friday morning in bankruptcy court in Chattanooga.
"We're going to convert those properties to Chapter 7," Fulton said, referring to a liquidation in which New Beginnings would be freed of its debts. "There's not going to be any payment on those taxes."
Fulton was in bankruptcy court Friday because New Beginnings Care hasn't written off all 15 homes it once operated in five states.
It still hopes to use Chapter 11 bankruptcy to reorganize and hang on to seven of its nursing homes, after losing eight in Ohio, Tennessee and Georgia when regulators cited "deficiencies" at several New Beginnings facilities and cut off Medicaid and Medicare payments.
New Beginnings got some relief Friday when Marietta, Ga.-based Gemino Healthcare Finance, which New Beginnings owes $2.8 million, agreed to let New Beginnings pay the interest it owed on March 1 and then pay a total of $100,000 over the next four weeks.
New Beginnings says it has less than $50,000 in assets, according to bankruptcy filings. The company operates, but doesn't own, facilities in low-income rural areas. New Beginnings leases everything inside the nursing homes, including the beds.
So creditors hope to recoup some of their debts through the "millions" of dollars that New Beginnings says it's owed in "receivables," or unpaid Medicaid and Medicare payments.
"We're owed more than we owe," New Beginnings co-founder Trent Tolbert said at a bankruptcy court hearing last month.
On Friday morning, U.S. Bankruptcy Court Judge Nicholas Whittenberg, who's presiding over the New Beginnings Care bankruptcy case, asked if new owners take over the Ohio nursing homes whether they might be entitled to any unpaid Medicaid and Medicare monies at the facilities.
"I'm just concerned and curious," Whittenberg said.
Fulton told the court, "We're not walking away from receivables, we're getting receivables. All we're walking away from is the facilities."
Contact Tim Omarzu at tomarzu@timesfreepress.com or at 423-757-6651.