LaVie Care Centers Bankruptcy and Lawsuit Allegations: A Closer Look
LaVie Care Centers Faces Lawsuit Amid Chapter 11 Bankruptcy Filing
LaVie Care Centers, an Atlanta-based company that recently filed for Chapter 11 bankruptcy with nearly $1.2 billion in debt, is now facing a lawsuit alleging that it transferred ownership of some of its facilities in Florida to avoid paying out settlements from previous disputes.
The company denies these claims, stating in a court filing that it was unable to curb losses and meet rent obligations to some of its largest landlords despite transferring nearly two-thirds of its facilities to new owners since early 2023. This includes 65 facilities in Florida alone and 90 in total, leaving LaVie with 43 remaining facilities across five states.
A lawsuit filed in late April by Tampa attorney John Anthony on behalf of 97 plaintiffs alleges that LaVie sought to change its corporate structure and transfer licenses for facilities to new ownership in order to avoid paying out settlements. Anthony called the company’s actions a ploy to evade legal consequences.
In response, LaVie addressed the allegations in the bankruptcy filing, stating that it had tried to settle out of court with the plaintiffs but was met with resistance. The company emphasized the need for a Chapter 11 restructuring to preserve its ability to continue caring for its residents.
LaVie plans to proceed with the restructuring with support from Omega Healthcare Investors, its main landlord and largest secured creditor. Omega has committed $10 million to fund 50% of the expected debtor-in-possession financing to ensure sufficient liquidity to operate the facilities during bankruptcy.
The company attributes its financial troubles to staffing shortages that began during the COVID-19 pandemic, leading to increased reliance on staffing agencies. Between 2020 and 2022, LaVie’s agency labor costs jumped by 380% to $277 million.
Debts related to legacy facilities include long-term lease obligations, unpaid vendor bills, and litigation costs. In Florida alone, LaVie’s facilities lost $133 million from 2022 to 2023 due to the state’s high minimum staffing requirements.
Despite these challenges, LaVie remains committed to providing quality care for its residents and navigating through the Chapter 11 restructuring process. The company’s spokesperson emphasized that the industry-wide challenges faced since the COVID-19 pandemic, combined with legacy liabilities, were the driving factors behind the bankruptcy filing.
