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Lenox: Nursing home seeks protection Friday, November 5, 1999By PATRICIA NORRIS

In an effort to resuscitate its finances, Lenox Healthcare Inc. of Pittsfield has filed for Chapter 11 bankruptcy protection in Wilmington, Del.

The company, which bases its reputation on saving other ailing homes, owes creditors $72 million, according to Lenox owner e. The company filed for bankruptcy in U.S. Bankruptcy Court on Wednesday.

Like many other nursing home companies, Lenox has been hit hard by cuts in Medicaid and Medicare reimbursement. The company's reimbursement was reduced by $10 million last year. "No company could sustain that," said e.

Lenox, the country's second-largest privately held nursing home company, has gobbled up facilities around the country to expand its portfolio.

Now in 16 states, Lenox operates 109 facilities, employs more than 10,000 people and provides care for more than 8,000 patients.

The company's reorganization attempt involves the 86 facilities it owns, said e. Most of those are in Delaware.

The only Massachusetts home included in the reorganization plan is Palmer House in Palmer. Operations there will continue normally throughout the process, which is expected to take six months, said e.

Facilities managed by Lenox, like Meadowood in South Hadley, Lyon in Ware and Riverdale Gardens in West Springfield, are not included in the bankruptcy proceedings.

With the court's help, Lenox plans to seek permission to close six out-of-state homes and convert some of the debt into equity.

Chapter 11 allows corporations to stop payments to creditors and reorganize finances under court supervision.

Some creditors have tentatively agreed to trade off $30 million dollars of debt for shares in the company, said e, who owns Lenox with his wife, .

"It will be a fresh start. and I will no longer be 100 percent owners, but we will have major investors in the company," he said.

The bankruptcy filing will not cause employee layoffs or change benefit plans, said e.

"The company is filing something called a pre-plan filing," he said. "It is nothing we've done in a panic."

Under Chapter 11, Lenox will continue to make all financial decisions for the company. Heller Healthcare Finance Inc. of land has agreed to provide $15,000,000 during the restructuring process. Other lenders also agreed to finance the company, said e.

Lenox's decision to file for Chapter 11 protection comes just one month after the company bid $12.4 million to buy 22 bankrupt nursing homes owned by Atlanta-based NewCare Health Corp.

Lenox's bid was rejected. But LTC Healthcare, a Nevada company that bought the homes Sept. 30, hired Lenox to manage all 22 entities, including four homes in Western Massachusetts. Three of those homes, Oak Manor in Holyoke, Elms Manor in Chicopee and Pine Manor in Springfield, will close Nov. 22. Meadowood in South Hadley will remain open.

C. Cohn, a lawyer from Boston who represents LTC, said he believes the Lenox filing will have no immediate effect on the former NewCare facilities. He refused comment on whether LTC planned to hire a new management company.

e first contemplated Chapter 11 after the NewCare homes were auctioned off to LTC, he said.

During the NewCare bankruptcy, "we were trying to fix NewCare; we weren't thinking about Lenox," e said.

Lenox's announcement comes on the heels of yet-another bankruptcy case involving Sun Healthcare Group of New Mexico. Sun, which owns four Massachusetts homes, filed for bankruptcy protection last month.

"Part of the problem is that the industry is going through change," said Springfield bankruptcy attorney Alan Dambrov.

With reimbursements cut, it is getting difficult for companies to take care of people and still control costs, he said.

A. Brandt Jr., an independent examiner who advised U.S. Bankruptcy Court Judge Henry J. Boroff to disregard Lenox's $12.4 million bid because he feared Lenox's financial condition would lead to bankruptcy, was not surprised by the filing.

"I hope they survive for their sake . . . but I'm exhaling and thanking the Lord that this particular bullet didn't hit me."

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© 1999 UNION-NEWS. Used with permission.

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