Case 19-61608-grs
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UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF KENTUCKY LONDON DIVISION IN RE: AMERICORE HOLDINGS, LLC, et al.1 Debtors
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Case No. 19-61608-GRS Chapter 11 Jointly Administered
NOTICE OF HEARING Notice is hereby given that the parties in interest shall have thirteen (13) days from the date of this Motion to file any Objection to the relief requested. This Motion, and any objection thereto shall be heard before the United States Bankruptcy Court for the Eastern District of Kentucky located at the Community Trust Building, 100 East Vine Street, Suite 200, Lexington, Kentucky 40507 on February 20, 2020 at 9:00 a.m.
MOTION TO REMOVE GRANT WHITE AS CHIEF EXECUTIVE OFFICER FOR THE DEBTORS AND FOR APPOINTMENT OF TRUSTEE Comes now Third Friday Total Return Fund, LP (“Third Friday”), by counsel, and for its motion to remove Grant White (“White”) as the “Chief Executive Officer” for the Debtors and appoint a Trustee to manage the affairs of the Debtors. The Debtors filed their petitions for relief under Chapter 11 of Title 11 of United States Code (“Bankruptcy Code”) on December 31, 2019 (the “Petition Date”) and the Debtors have
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The Debtors in these Chapter 11 cases are (with the last four digits of their federal tax identification numbers in parentheses): Americore Holdings, LLC (0115); Americore Health, LLC (6554); Americore Health Enterprises, LLC (3887); Ellwood Medical Center, LLC (1900); Ellwood Medical Center Real Estate, LLC (8799); Ellwood Medical Center Operations, LLC (5283); Pineville Medical Center, LLC (9435); Izard County Medical Center, LLC (3388); Success Healthcare 2, LLC (8861); St. Alexius Properties, LLC (4610); and, St. Alexius Hospital Corporation #1 (2766).
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continued to manage and operate hospitals pursuant to Sections 1107 and 1108 of the Bankruptcy Code. Third Friday Total Return Fund, LP (“Third Friday”) is a Delaware limited partnership which is managed by Michael Lewitt. Americore Holdings, LLC and its affiliates owe Third Friday approximately $25 million dollars. At least since the Petition Date the Debtors have been managed and controlled by Grant White. Third Friday is informed and believes that Mr. White is not qualified to manage the open hospitals let alone bring the closed hospitals back into operation. Third Friday acknowledges that simple mismanagement may not be sufficient grounds to remove Mr. White and appoint a trustee for cause. Mr. White’s conduct is, however, not simple mismanagement but is complete and gross mismanagement of the hospitals he is “managing” that is more than sufficient grounds to remove him for cause and appoint a Trustee. Michael Lewitt, an attorney who is the Manager of the General Partner of The Third Friday Total Return Fund states that he has worked with Mr. White over the last 18 months and that Mr. White lacks the lacks adequate knowledge of the hospital and healthcare business. Mr. White conducts business in a unethical manner, consistently breaches contracts, violates loan agreements, deliberately misleads lenders, vendors, and employees, and consistently acts in a manner that damages the reputation and prospects of Debtor. Mr. Lewitt worked with Mr. White for over a year and found him to be unsuited for managing and business, let alone hospitals. Section §1104(a)(1) of the Bankruptcy Code provides as follows: (a)
At any time after the commencement of the case but before confirmation of a plan, on request of a party in interest or the United States trustee, and after notice and a hearing, the court shall order the appointment of a trustee –
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for cause, including fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor by current management,
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either before or after the commencement of the case, or similar cause, but not including the number of holders of securities of the debtor or the amount of assets or liabilities of the debtor. (2)
If such appointment is in the interests of creditors, any equity security holders, and other interests of the estate, without regard to the number of holders of securities of the debtor or the amount of assets or liability of the debtor.
Cause exists to appoint a trustee in this case. The Court may appoint a trustee under Section 1104(a)(1) after notice and hearing, for “cause, including … incompetence, or gross mismanagement of the affairs of the debtor by current management…” It is clear that “cause” does in fact exist and the Court should remove Mr. White from the management of the hospitals. If the Court finds that it is in the best interest of the creditors, the estate, and other parties in interest that a trustee be appointed. See In re Microwave Prods. of Am., Inc., 102 B.R. 666, 676 (Bankr. W.D. Tenn. 1989). There the Court declined to make a determination under Section 1104(a)(1) and instead held that 1104(a)(2) was applicable due, in large part, to the “considerable and continuing erosion of confidence in the debtor and its board of directors to operate the company.” Microwave at p. 676. The situation is the same with the management of the hospitals in the present case. The erosion of confidence is in the management of the hospitals is increasing and the appointment of a trustee will be in the best interest of the creditors all other parties in interest. There is no doubt that removing Mr. White is in the best interest of the debtors, their creditors and most importantly, the doctors and patients at the hospitals. A trustee is absolutely necessary to preserve the assets of the Debtor from irreparable loss through gross mismanagement. Substantial losses and mismanagement will continue absent the appointment of a trustee. Third Friday requests that Mr. White be dismissed from any further management duties for the Debtors, that a trustee be appointed in this case, and for all other relief as is just and equitable.
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Respectfully submitted, /s/ Mark J. Sandlin Mark J. Sandlin Jan M. West Goldberg Simpson, LLC 9301 Dayflower Street Prospect, Kentucky 40059 (502) 589-0444 – Phone (502) 581-1344 – Fax msandlin@goldbergsimpson.com Counsel for Third Friday Total Return Fund, LP
CERTIFICATE OF SERVICE It is hereby certified that on February 7, 2020, a true and correct copy of the foregoing was mailed electronically through the U.S. Bankruptcy Court’s ECF system at the electronic address as set forth in the ECF system to the U.S. Trustee and all other persons receiving electronic notifications in this case, and mailed, first-class, postage pre-paid, to those persons, if any, identified in the Court’s Notice of Electronic Filing who do not receive electronic notice but are entitled to be served. Terri Jane Freedman on behalf of Creditor Cardinal Health 110, LLC Chiesa, Shahinian & Giantomasi, PC One Boland Dr. West Orange, NJ 07052 Terri Jane Freedman on behalf of Creditor Cardinal Health 200, LLC Chiesa, Shahinian & Giantomasi, PC One Boland Dr. West Orange, NJ 07052 Suzanne Koenig SAK Management Services, LLC 300 Saunders Rd. Suite 300 Riverwoods, IL 60015
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Jeffrey P. Myers on behalf of Creditor Penn Med, LLC Myers Law Group, LLC 17025 Perry Highway Warrendale, PA 15086 Mark A. Pacella on behalf of Other Commonwealth of Pennsylvania PA Office of Attorney General Strawberry Square 14th Fl Harrisburg, PA 17120 Benjamin J. Steinberg on behalf of Creditor Penn Med, LLC Myers Law Group, LLC 17025 Perry Highway Warrendale, PA 15086 Scott A. Zuber on behalf of Creditor Cardinal Health 110, LLC Chiesa Shahinian & Giantomasi PC One Boland Drive West Orange, NJ 07052 Scott A. Zuber on behalf of Creditor Cardinal Health 200, LLC Chiesa Shahinian & Giantomasi PC One Boland Drive West Orange, NJ 07052
/s/ Mark J. Sandlin Mark J. Sandlin
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Case 19-61608-grs Doc 191-1 Filed 02/07/20 Entered 02/07/20 15:12:41 Proposed Order Order to Remove Grant White as Chief Executive Officer of Debtors
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UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF KENTUCKY LONDON DIVISION IN RE: AMERICORE HOLDINGS, LLC, et al.1 Debtor
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Case No. 19-61608-GRS Chapter 11 Jointly Administered
ORDER TO REMOVING GRANT WHITE AS CHIEF EXECUTIVE OFFICER OF DEBTORS Motion having been made, arguments of counsel heard, and the Court being sufficiently advised, IT IS HEREBY ORDERED that Third Friday Total Return Fund, LP’s Motion to Remove Grant White as Chief Executive Officer of Debtors be, and hereby is GRANTED.
TENDERED BY: Mark J. Sandlin Goldberg Simpson, LLC 9301 Dayflower Street Prospect, Kentucky 40059 (502) 589-0444 – Phone (502) 581-1344 – Fax msandlin@goldbergsimpson.com Counsel for Third Friday Total Return Fund, LP
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The Debtors in these Chapter 11 cases are (with the last four digits of their federal tax identification numbers in parentheses): Americore Holdings, LLC (0115); Americore Health, LLC (6554); Americore Health Enterprises, LLC (3887); Ellwood Medical Center, LLC (1900); Ellwood Medical Center Real Estate, LLC (8799); Ellwood Medical Center Operations, LLC (5283); Pineville Medical Center, LLC (9435); Izard County Medical Center, LLC (3388); Success Healthcare 2, LLC (8861); St. Alexius Properties, LLC (4610); and, St. Alexius Hospital Corporation #1 (2766).