Cold Spring Hills Center for Nursing and Rehabilitation has filed for chapter 11 bankruptcy protection, stating that it must reorganize its business and access additional cash to pay off more than $50 million in debt.
The Long Island nursing home filed for bankruptcy protection in a federal court in White Plains on Thursday “to obtain breathing space, unlock cash flow that is presently being restrained and evaluate its path moving forward,” according to the documents.
Bankruptcy status could buy Cold Spring Hills’ owners, Bent Philipson and his son, Avi, time to pay back the nursing home’s creditors but is not a fix-all; the nursing home could still be forced to shutter and evacuate its residents in the coming weeks if the state Department of Health does not approve an application for a new owner to take on the facility’s financial recovery, the filing said.
“The Debtor is hopeful that the DOH will promptly approve the appointment of a temporary receiver, but in the absence of prompt approval, the Debtor will have no alternative but to begin to evacuate the facility in an orderly fashion,” the filing states.
State health officials are reviewing an application for Eliezer Jay Zelman, who owns a handful of other nursing homes in New York, to become the temporary receiver and eventual new owner of Cold Spring Hills. However, the application was incomplete as of last month, according to the Health Department, delaying potential changes. The Health Department did not immediately respond to a request for comment on the status of Cold Spring Hills’ applications for a temporary receiver and new owner.
The bankruptcy filing is the latest attempt by Cold Spring Hills’ owners in recent weeks to keep the nursing home afloat. The owners have raised alarms about the nursing home’s financial losses over the past year, which they say stem from a sprawling state fraud investigation and declining patient admissions.
Troubles began for Cold Spring Hills after Attorney General Letitia James alleged in 2022 that Philipson and his former co-owner, Benjamin Landa, diverted more than $22 million in taxpayer funds away from resident care to line their own pockets. Although a state judge rejected most allegations of financial fraud, the attorney general’s office filed an appeal and the case is ongoing. The owners say that the longstanding legal battle has drained its cash, but lawyers for the state have suggested that the Philipsons have enough money to keep the facility’s lights on, evidenced by the fact that they continued to meet payroll last month without Medicaid funds from the state.
Financial deficits prompted the nursing home to announce a plan to evacuate approximately 300 residents and terminate 500 workers days before Christmas. The move was quickly blocked by a state judge who ordered the nursing home to call off the “emergency evacuation” on Dec. 20, halting the removal of residents and any layoffs until a court hearing scheduled for Jan. 6.
Cold Spring Hills is scheduled to present its bankruptcy case before a judge at a 1:30 p.m. hearing today.
