Haven Healthcare asks for court OK of sale agreement failing to provide recovery for unsecured creditors

By Jennifer Lanning Drey

Portland, Ore., June 23 - Haven Healthcare Management, LLC requested court approval to sell substantially all of its assets for $84.75 million to FC/SCH Acquisitions Partners, LLC, according to a Friday filing with the U.S. Bankruptcy Court for the District of Connecticut.

The amount is not enough to provide unsecured creditors with a recovery in the company's Chapter 11 bankruptcy case; however, the company said the agreement is the result of a June 12 auction at which three secured creditors made credit bids for their collateral. Haven said it has been actively marketing the assets for more than eight months but received no other bids.

In order for unsecured creditors to receive any recovery from the sale, the sale price would have to be at least $103 million, Haven said in the filing.

"There is no evidence or reason to believe that any other party would pay anything close to $103 million for the Haven assets or that the debtors could reorganize and preserve a $103 million enterprise value," the company said in the filing.

The company said the only alternatives to the sale are foreclosure or receivership, which would also provide a zero recovery for unsecured creditors.

According to the filing, the Connecticut Department of Social Services has agreed to significant concessions to make the sale possible, including waiving $2.9 million of secured claims.

In exchange, Haven will release all claims and causes of actions alleged against Social Services.

FC/SCH Acquisitions has paid a $1 million deposit.

Lenders set sale deadline

According to the sale motion, Haven defaulted on the terms of its DIP facility after failing to have a court-approved sale agreement in place by May 30. The DIP lenders agreed to continue funding the company through the closing of an asset purchase agreement but have since told Haven they will not continue to fund the company beyond the end of July.

As previously reported, LifeHouse Retirement Properties, Inc. terminated a previously negotiated asset purchase agreement with Haven in May.

Haven has requested that a sale hearing be held by June 27 and the sale close by July 31.

Haven, a Middletown, Conn.-based nursing home operator, filed for bankruptcy on Nov. 20, 2007. Its Chapter 11 case number is 07-32722.

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