TRADITIONAL CHAPTER 11 | SUBSTANTIVE CONSOLIDATION
Represented the debtors in two related Chapter 11 cases (Case Nos. 11-73169 and 12-49353) that were substantively consolidated before the Hon. William J. Lafferty in the U.S. Bankruptcy Court for the Northern District of California, Oakland Division. Unlike mere joint administration, substantive consolidation merges the assets and liabilities of multiple debtors into a single pooled estate and extinguishes inter-debtor claims, and courts grant it only on a showing of tightly intertwined operations or creditor reliance on the debtors as a single economic unit.
The consolidated proceeding was used to restructure a long-term care home business and to resolve every strand of the debtors’ pre-petition litigation in a single forum — including employment-related claims, property tax claims, and commercial litigation brought by a banking lender. The Chapter 11 plan was confirmed on May 18, 2014, allowing the long-term care operations to continue under a rationalized capital structure.
Result: Substantive consolidation granted; Chapter 11 plan confirmed (May 18, 2014); employment, tax, and lender litigation all resolved; long-term care business preserved
U.S. Bankruptcy Court, Northern District of California — Oakland Division
