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In re N. Am. Health Care, Inc.

United States Bankruptcy Court for the Central District of California

February 5, 2016, Decided; February 5, 2016, Entered on Docket

Case No.: 8:15-bk-10610-MW Jointly administered with: Case No. 8:15-bk-10612-MW, Chapter 11 Cases

Opinion

 [*684]  MEMORANDUM DECISION AND ORDER ON DEBTORS' TORT CLAIM RESOLUTION PROPOSAL

WALLACE, J.

Before the Court is Debtors' motion for an order approving and adopting Debtors' Tort Claim Resolution Proposal, Docket No. 264, filed June 12, 2015 (the "TCRP"). The TCRP provides for the mediation of  [*685]  each of the six1 personal injury/wrongful death tort claims subject to the TCRP, followed by this Court's estimation of any claim unresolved through mediation. Should estimation be required, Debtors have asked the Court to estimate the claims individually for purposes of voting and distribution. For the reasons discussed below, the Court grants the motion in part and denies it in part.

Jurisdiction and Venue

This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and General Order 13-05, filed July 1, 2013, of the United States District Court for the Central District of California. Venue is proper pursuant to 28 U.S.C. § 1408. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (B).

Debtors' History and Business

Debtor Carmichael Care, Inc. ("CCI") operates Rosewood Post-Acute Rehabilitation, a skilled nursing facility located in Sacramento, California (the "Rosewood Facility"). The Rosewood Facility provides full-time care 24 hours per day/ 7 days per week to approximately 107 patients, employing for that purpose approximately 184 employees.

Debtor North American Health Care, Inc. ("NAHC") provides bookkeeping and accounting services, social media services, payroll services, insurance procurement services, information technology services, human resource services and other services to the Rosewood Facility pursuant to a Services Agreement between NAHC and CCI. NAHC, whose principal place of business is Dana Point, [**3]  California, also provides essential services to 35 other facilities generally in the skilled nursing care line of business.

NAHC and CCI are brother-sister corporations owned by the same interests. NAHC is owned 44 percent by Vermillion Investment Co. LLC, 24 percent by Davey Jay LLC, 28 percent by Oakleaf Holding LLC, 2 percent by Shard Holding LLC and 2 percent by Jay Laws. CCI's ownership structure is identical to NAHC's ownership structure. A group of tort claimants subject to the TCRP has alleged that NAHC is owned, operated and controlled by members of two families — the Sorensens and the Lawses — with no outside investors, and that NAHC operates 36 nursing homes (including the Rosewood Facility) as part of a nursing home conglomerate. Debtors have not disputed these points.

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544 B.R. 684 *; 2016 Bankr. LEXIS 383 **; 62 Bankr. Ct. Dec. 40

In re: North American Health Care, Inc., Debtor and Debtor in Possession. In re: Carmichael Care, Inc., Debtor and Debtor in Possession.

CORE TERMS

estimation, tort claim, mediation, purposes, aggregate, tort claimant, voting, confirmation, unliquidated, liquidation, unliquidated claim, bankruptcy court, jury trial, Claimants, purpose of distribution, district court, patients, election, unduly, wrongful death, settlement, percent, profits, reasons

Bankruptcy Law, Bankruptcy, Claims, Estimation of Claims, Governments, Legislation, Interpretation, Procedural Matters, Jurisdiction, Core Proceedings, Noncore Proceedings, Allowance of Claims, Jury Trials