Consulate Health gets approval of settlement with DIP lender, committee

By Sarah Lizee

Olympia, Wash., Sept. 30 – CMC II, LLC, which does business as Consulate Health Care, received court approval of a settlement between the debtors, CPSTN Operations, LLC, the debtors’ non-debtor affiliates and the official committee of unsecured creditors, among others, according to a minute entry filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

Following months of negotiations, the parties agreed to the terms of a global settlement that, upon closing, will resolve major pending disputes and litigation in the Chapter 11 cases and provide for significant benefits upon the debtors’ estates and creditors, the company had said in its motion seeking approval of the settlement.

The settlement reflects a material increase in value to be paid by CPSTN, the company’s debtor-in-possession lender, over the prior stalking horse bids submitted for the company’s manager and remaining assets, as well as CPSTN’s agreement to assume liabilities owed to many of the debtors’ creditors and provide additional funds to the debtors’ largest individual creditors, and pay most trade creditors in full.

The settlement will also resolve the many points of contention and actual and threatened litigation between and among the parties.

Under the settlement, CPSTN will waive all $5 million of the outstanding debt under the DIP loan, and will provide additional estate funding payments over time totaling $500,000 to cover remaining administrative and priority claims, if any.

The settlement also provides for the negotiated payment of various estate administrative expenses, including certain professional fees.

The committee will withdraw all pending objections to the sale motion and its pending examiner motion, along with its pending discovery requests and deposition notices, and will support the settlement agreement.

Consulate Health Care is a Maitland, Fla., senior health care services provider. The company filed bankruptcy on March 1, 2021 under Chapter 11 case number 21-10461.

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