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protected, there was no evidence regarding past issues of patient care but, rather, evidence showed that patients had access to their medical records and, generally, a low level of provider dependency, and there was evidence that debtors' doctors worked in teams, which provided internal oversight and safeguard for patient care.
iii. In re Flagship Franchises of Minnesota, LLC, 484 B.R. 759 (Bankr. D. Minn. 2013)
Issue: Whether the appointment of an ombudsman was necessary to protect patients in a healthcare provider's Chapter 11 case, when debtor's patients included those with Alzheimer's, Parkinson's, and brain injuries, leaving them particularly vulnerable and unable to protect their rights.
Holding: The court held that appointment of ombudsman was not necessary to protect patients in Chapter 11 case filed by the debtor healthcare provider, though patients whom debtor served, including adults with Alzheimer's, Parkinson's, and brain injuries, were particularly vulnerable and unable to protect their rights. The court found the following factors are typically used in determining whether to appoint an ombudsman in a healthcare provider bankruptcy: "(1) the cause of the bankruptcy; (2) the presence and role of licensing or supervising entities; (3) the debtor's past history of patient care; (4) the ability of the patients to protect their rights; (5) the level of dependency of the patients on the facility; (6) the likelihood of tension between the interests of the patients and the debtor; (7) the potential injury to the patients if the debtor drastically reduced its level of patient care; (8) the presence and sufficiency of internal safeguards to ensure the appropriate level of care; and (9) the impact of the cost of the ombudsman on the likelihood of a successful reorganization." Bankruptcy court have great discretion in applying the factors, and none of the factors are determinative. Though the court found the patients of this debtor were particularly vulnerable and unable to protect their rights, the court found other safeguards sufficient to protect the patients. In particular, the court found the debtor and its employees are subject to extensive regulatory and licensing requirements and the debtor had no disciplinary action against it in the past ten years.
i. In re GMG Capital Partners III, LP, 503 B.R. 596 (Bankr. S.D. NY, Jan 24, 2014).
Issue: Chapter 11 debtor moved for extension of 120-day period when it alone could file a proposed Chapter 11 plan.
Holding: In deciding whether "cause" exists to extend 120-day exclusivity period when debtor alone can file a proposed Chapter 11 plan, bankruptcy court may consider the following factors: (1) size and complexity of case; (2) need for sufficient time to permit debtor to negotiate plan of
©2014 William L. Norton III
