Cold Spring Hills Nursing Home Sold to Receiver for $10 Amid $22.6M Philipson Fraud Suit

Cold Spring Hills Center for Nursing & Rehabilitation kept its 588-bed Long Island facility open through a receivership sale, but eighteen months into chapter 11 the estate has stalled in a fight over whether the case should survive at all. The official committee of unsecured creditors moved to convert the case to chapter 7 on March 31, 2026, arguing that the non-operating debtor cannot pay its administrative expenses, and the debtor objected while the disclosure statement for its liquidation plan remained unapproved.

Cold Spring Acquisition, LLC, the facility's operator, filed for chapter 11 on January 2, 2025, in the U.S. Bankruptcy Court for the Southern District of New York before Judge Sean H. Lane, under lead case number 25-22002. The distress stemmed from a convergence of pressures: a 2022 Attorney General lawsuit alleging $22.6 million in Medicaid and Medicare fund diversions by the Philipson family owners, COVID-19-driven census declines, and union restraining notices that froze access to operating cash while the facility was losing more than $600,000 weekly.

378Sywood LLC assumed operations as receiver in April 2025 for a $10 purchase price plus assumption of roughly $79.5 million in Greystone obligations, averting a threatened closure. The path to a confirmed plan has since been blocked on three fronts: the committee's conversion motion, a New York Attorney General objection to the plan's open-ended automatic stay, and an examiner investigation that has catalogued potential insider-transfer claims against more than 20 Philipson-related entities.

Debtor(s)	Cold Spring Acquisition, LLC (d/b/a Cold Spring Hills Center for Nursing & Rehabilitation)
Court	U.S. Bankruptcy Court, Southern District of New York (White Plains)
Judge	Hon. Sean H. Lane
Case Number	25-22002
Petition Date	January 2, 2025
Plan Type	Chapter 11 Plan of Liquidation (disclosure statement unapproved as of June 2026)
Sale/Receiver	378Sywood LLC (Eliezer Jay Zelman); receiver since April 22, 2025
Consideration	$10 plus assumption of Greystone's roughly $79.5M claims
DIP Financing	Up to $4.0M (CSHACQDIP, LLC); $2.0M interim; later repaid in full
General Unsecured Claims	About $123.3M projected Class 4 claims; corrected plan warns recovery could be zero
Pending Dispute	Committee motion to convert to chapter 7 (filed March 31, 2026)

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Bent Philipson Ownership and the Insider Web

Cold Spring Hills Center for Nursing & Rehabilitation operated a 588-bed skilled nursing facility in Woodbury, New York, providing long-term care, rehabilitative services, hospice care, and dementia programs. The facility employed approximately 500 personnel and generated about $75.5 million in gross revenue in 2023.

Philipson family ownership. The facility entered the Philipson and Landa portfolios in 2016 through a $67.8 million acquisition. Bent Philipson served as principal owner of the nursing home operation, though state enforcement filings allege he used straw owners to conceal his control from regulators. His son Avi Philipson held a 24% stake and served as managing member as approved by the state Public Health and Health Planning Council. The ownership structure became a focus of the chapter 11 case through the U.S. Trustee's request for independent oversight and the examiner investigation into Philipson-related transactions.

Landlord and intercompany debt. The landlord entity, Cold Spring Realty Acquisition LLC, was controlled by the Philipson family and was owed about $21.8 million in unpaid rent at the time of filing. A substantial portion of the estate's liabilities were therefore owed to entities controlled by the same principals who managed the debtor, a structure the examiner later flagged for possible recharacterization and avoidance.

AG Lawsuit, Census Collapse, and the Blocked Evacuation

The First Day Declaration filed by CRO Martin A. Cauz described multiple operational and financial pressures that converged in late 2024.

The Attorney General investigation and lawsuit. In December 2022, New York Attorney General Letitia James filed a 186-page lawsuit against Cold Spring Hills and its owners, alleging "repeated neglect and inhumane treatment" of residents and the diversion of over $22.6 million in Medicaid and Medicare funds to 13 companies owned by the Philipsons. The complaint accused Bent Philipson of serving as principal owner while using straw owners to deceive the Department of Health, and characterized Avi Philipson as "a willing straw owner inserted to deceive" regulators.

Census decline. The First Day Declaration tied the distress to the lawsuit and related publicity, which management said contributed to a steep census decline from 423 to below 350 between April and September 2024 — well under the roughly 600-bed occupancy needed for profitable operations. COVID-positive admissions and resident deaths had earlier reduced census as well.

Union restraining notices and the liquidity crisis. In October 2024, the 1199SEIU National Benefits Funds imposed CPLR § 5222 restraining notices on the debtor's Medicaid reimbursement funds. With those funds frozen, the facility could not make a weekly payroll of approximately $1.14 million, and the First Day Declaration stated the debtor was unable to meet a court-ordered $1.14 million undertaking that would have released additional funds. By November 2024 the combination of restrained funds and declining revenue left the debtor unable to make payroll or cover essential expenses.

The blocked evacuation. In December 2024, Cold Spring Hills planned an "emergency evacuation" of residents with a December 31 closure and sweeping layoffs. The debtor filed a WARN notice on December 17, 2024, planned to begin layoffs on December 23, and prepared to relocate approximately 320 residents on short notice. The New York Attorney General's Office sought a temporary restraining order, arguing the planned evacuation was "illegal" and put vulnerable residents at risk. On December 20, 2024, the state court issued a TRO keeping staff and residents in place and requiring continued operation. The chapter 11 filing followed two weeks later.

SDNY Filing, DIP Financing, and the Trustee Challenge

Cold Spring Acquisition filed its chapter 11 petition on January 2, 2025, before Judge Sean H. Lane. The filing disclosed $1 million to $10 million in assets against $50 million to $100 million in liabilities. The court entered interim first-day orders on January 8, 2025, authorizing continued payment of employee wages and benefits, maintenance of insurance, and continuation of patient care.

DIP financing. The corrected disclosure statement states the debtor used related-party bridge financing of about $2.74 million prepetition and then obtained a postpetition DIP commitment of up to $4.0 million, with $2.0 million available under the interim financing order entered January 13, 2025, with CSHACQDIP, LLC as lender. By the time of the corrected disclosure statement, the debtor reported that the DIP lender had been repaid in full and that no DIP facility claims remained.

Trustee motion and stipulation. On January 16, 2025, the U.S. Trustee filed a motion seeking appointment of a chapter 11 trustee, arguing that the prepetition management — the same principals accused of diverting $22.6 million from resident care — should not control the bankruptcy estate. The motion was resolved by stipulation on January 23, 2025, without displacing management, and the case instead moved toward an examiner structure.

Committee. The Official Committee of Unsecured Creditors was appointed on February 5, 2025, and retained Rimon P.C. as counsel and Kroll Associates, Inc. as financial advisor. The committee would become the most active adversary of the Philipson-affiliated estate, driving Rule 2004 discovery and, ultimately, the motion to convert the case to chapter 7.

Sale Process and the Union Standoff

On January 13, 2025, the debtor filed a sale motion seeking approval of a sale and receivership arrangement with 378Sywood LLC, an entity controlled by Eliezer Jay Zelman, who operates several nursing homes across New York. The transaction was structured as a receivership rather than a traditional asset sale: the purchaser paid $10, agreed to obtain a new $72 million mortgage and assume Greystone's obligations, and committed to fund all operating and capital expenses going forward, with no cash to the estate and closing conditioned on Department of Health Certificate of Need approval.

Union negotiations collapse. The sale was conditioned on 378Sywood reaching a modified collective bargaining agreement with 1199SEIU United Healthcare Workers East. At the January 28, 2025 sale hearing, the sale could not proceed because the purchaser and union remained at impasse. The union's sale objection, filed January 24, 2025, said Zelman sought to remove registered nurses, physical therapists, occupational therapists, respiratory technicians, and dietitians from the bargaining unit, and raised concerns about benefits reductions and canceled wage increases that union leadership warned could trigger mass resignations. More than 800 residents, employees, and family members faced displacement if the parties could not agree.

Closure plan as leverage. With negotiations stalled, the debtor submitted a closure plan to the New York Department of Health on January 31, 2025. On February 14, 2025, Judge Lane approved the closure plan, entering a closure plan order with a May 15, 2025 deadline. The DOH granted approval on February 27, 2025.

Resolution and receivership closing. In March 2025, after the closure plan was approved, 378Sywood and 1199SEIU reached an agreement; the precise terms of the modified collective bargaining agreement were not publicly disclosed. The court entered a combined sale and receivership order on March 20, 2025, approving 378Sywood as both temporary receiver and buyer of substantially all assets, free and clear except for assumed liabilities. The order averted the planned May 15 facility closure, expressly stated it was not a sub rosa plan, preserved the debtor's ownership of pre-receiver accounts receivable, and authorized new Metropolitan Commercial Bank accounts with Greystone receiving replacement-lien treatment without admitting lien validity, extent, or priority. The receiver assumed operations on April 22, 2025 while regulatory approval for permanent ownership transfer continued.

Greystone Mortgage and Disputed Unsecured Claims

Cold Spring had no traditional secured debt and no public debt; all obligations aside from the Greystone mortgage were unsecured. By the time of the corrected disclosure statement, the debtor described Greystone Funding Company as asserting a $75,925,320 prepetition claim plus a $3,617,232 postpetition administrative claim, with the purchaser agreeing to assume all obligations due to Greystone outside the estate.

Claim Category	Approximate Amount	Status
Greystone (mortgage)	$75,925,320 prepetition + $3,617,232 admin	Assumed by purchaser
Cold Spring Realty (landlord rent)	$21,803,468	Disputed insider claim
Trade creditors	$20,000,000+	General unsecured
1199SEIU and benefit funds	$62,460,000 (asserted)	Disputed
Resident trust funds	$1,200,000	General unsecured

The union claim. The corrected disclosure statement reports that the union and related funds asserted about $62.46 million in claims — roughly $2.74 million administrative, $9.42 million priority, and $50.31 million general unsecured — all of which the debtor disputed. The funds, in turn, contended that the plan materials improperly excluded approximately $2,737,214.76 of administrative and $9,420,497.84 of priority claims from projected allowed amounts and that the debtor's objections rested on factual and legal misrepresentations. Those unpaid contributions to employee benefit and pension funds were the same obligations that triggered the October 2024 restraining notices.

Insider obligations. The landlord claim held by Philipson-controlled Cold Spring Realty Acquisition LLC exceeded $21.8 million, and trade creditors held roughly $20 million more, according to the First Day Declaration. Because so much of the claims pool is asserted by insiders or disputed by the debtor, the size of the eventual allowed general unsecured pool — and therefore any recovery rate — turned on contested claims litigation that remained unresolved as the conversion fight took over the docket.

Examiner's Report and Insider-Transfer Claims

Rather than displacing management with a chapter 11 trustee, the case moved to an examiner structure. On February 21, 2025, Judge Lane approved Leslie A. Berkoff as examiner to investigate prepetition insider transactions, Philipson family fund diversions, and self-dealing with related entities, with a scope and work plan approved on March 26, 2025.

The examiner's report. Berkoff filed her report on February 27, 2026, framed as an investigative summary that expressly disclaims conclusive findings of fact, conclusions of law, and any adjudication of liability. Even with that disclaimer, the report identifies a broad litigation inventory: potential causes of action under the Bankruptcy Code and New York law including fraudulent transfer, preference, recharacterization of insider debt, breach of fiduciary duty, unjust enrichment, veil-piercing, alter-ego, and Public Health Law theories. The report leans on the Attorney General's allegations that "up-front profit" structures diverted public funds intended for resident care.

Named targets. The report names entity targets including Cold Spring Realty, Ventura, Highview, Rosewell, the Graph entities, Comprehensive, Prudent Consulting, Excelsior, Sentosa, B&L Consulting, Philipson Family LLC, Ross CSH Holdings, Standard & Preferred, and ZBL Management, and individual targets Bent Philipson, Avi Philipson, Benjamin Landa, Cheskel Berkowitz, David Zahler, Joel Leifer, and Joel Zupnick. It singled out insider confessions of judgment — including roughly $15.39 million for unpaid rent covering 2016 through 2023 — as warranting further investigation for possible prepetition claims.

Rule 2004 discovery. The committee's parallel Rule 2004 campaign targeting more than 20 Philipson-related entities escalated into multiple orders compelling production and granting contempt-related relief in February 2026. On March 12, 2026, the court entered an order transferring discovery rights to the plan administrator, keeping the insider investigation alive even as the liquidation plan was being solicited.

Liquidation Plan, Recoveries, and Professional Fees

The debtor filed an initial chapter 11 plan on September 2, 2025, and an amended plan offering general creditors about 2% on October 14, 2025. The debtor then filed a corrected second amended plan and corrected disclosure statement on February 9, 2026, built around the already-approved sale and receiver structure.

Class treatment. The corrected disclosure statement establishes Class 1 Greystone claims, Class 4 general unsecured claims, and Class 5 personal injury claims. Its liquidation analysis assumes Greystone's $79,542,553 claim will be assumed in full by the purchaser, producing an estimated 100% recovery for Greystone under either the plan or a hypothetical chapter 7. Personal injury claims are limited to recovery from applicable insurance.

A shrinking recovery. The corrected disclosure statement marks a sharp deterioration from the October 2025 plan's 2% estimate: it now estimates about $123.3 million of projected allowed Class 4 claims (excluding personal injury) and warns there may be no recovery at all for general unsecured creditors, with conversion to chapter 7 potentially reducing recoveries further. The committee's June 2026 filings put it more bluntly, asserting that the plan now depends entirely on a $1,000,000 settlement payment without which unsecured creditors would receive nothing.

M&T Bank settlement. The disclosure statement also addressed an M&T Bank adversary over restricted cash. The court approved that settlement on March 24, 2026, under which M&T would receive about $455,454.57 and roughly $550,455 in restricted cash would be released to the debtor; M&T withdrew its $550,454.57 claim (claim #148) on April 24, 2026, removing it as a contested matter.

Professional fees. Professional-fee burn became central to the late-stage dispute. On December 9, 2025, Judge Lane entered an interim compensation order covering May 1–September 30, 2025 for ten professionals, after several firms cut fees to resolve U.S. Trustee objections. Manatt, Phelps & Phillips, as debtor's counsel, was awarded by far the largest amount, $1,374,579.95 in fees plus $3,447.35 of expenses, with smaller awards to Garfunkel Wild ($85,566.70), Rimon ($88,161.70), Moritt Hock & Hamroff ($75,701.30), Martin Friedman CPA ($55,977.50), Schwartz Sladkus Reich Greenberg Atlas ($51,140.03), Kroll Associates ($20,268.00), Pryor Cashman ($20,338.79), patient care ombudsman David N. Crapo ($25,469.20), and claims agent Omni Agent Solutions ($3,385.00). Examiner Berkoff and her counsel Moritt Hock & Hamroff later filed a third and final fee application on April 13, 2026 seeking $161,618.57 for the October 2025–April 2026 period.

AG Stay Objection and the Chapter 7 Conversion Fight

The disclosure statement never won approval, in part because of a New York Attorney General objection filed April 28, 2026. The OAG's central complaint is that the plan would keep the automatic stay in "full force and effect" beyond confirmation with no termination date, which it argued violates section 362(c)(2) and functions as a "perpetual blockade" shielding 22 non-debtor owners and related parties from the State's enforcement appeals. The objection accused the debtor of using nursing-home residents as "human shields" to delay the sale closing and thereby block conversion. It tied the dispute to the underlying state litigation: a March 15, 2024 state-court decision ordered certain non-debtor respondents to pay $2,015,556 in restitution, and the OAG's pending appeal seeks to redirect that restitution to the public programs and to reverse dismissal of claims over an additional $20 million in transfers. The OAG asked that the stay terminate on the earlier of confirmation, the sale closing, or further order; the debtor accepted other edits but refused that stay language.

The conversion motion. On March 31, 2026, the committee, through Rimon's Ronald J. Friedman, moved to convert the case to chapter 7 under section 1112(b), arguing the debtor is a non-operating entity with no revenue that cannot satisfy section 1129(a)(9)'s requirement to pay administrative expenses. The committee's reply supporting conversion laid out the solvency math: the debtor reported $2,566,960 of cash as of February 28, 2026 (only $2,016,505 unrestricted), estimated chapter 11 professional fees through March 31 at roughly $2.3 million, and projected an approximately $650,000 shortfall just to cover fees, with adjusted cash falling to about $1.2 million by April 16. It characterized the debtor's funding sources — accounts receivable, DOH claims, avoidance actions, and confidential third-party funding — as speculative.

The debtor's defense. The debtor objected on April 7, 2026 through Manatt's Schuyler Carroll, arguing the motion was procedurally defective for lack of Rule 2002(a)(5) notice and that the committee had not shown "cause." It said it is not administratively insolvent, that the committee improperly treats estimated fees as fixed and assumes disputed claims will be allowed, and that it has viable funding: more than $2.1 million of accounts receivable, more than $1.2 million of DOH claims, and more than $2 million of avoidance actions. The debtor argued chapter 11 is the superior vehicle to close the sale — expected within six to eight weeks — because its CRO had spent over a year coordinating daily with the receiver, and warned that disrupting the sale would reinstate Greystone's roughly $79.5 million in claims, which Greystone agreed to waive only if the sale closes. Greystone separately filed a reservation of rights.

An unresolved fight. The dispute remained open in mid-2026. In dueling June 9, 2026 letters to Judge Lane, the debtor asked the court to refer the matter to mediation, said no administrative expenses were then due, and contended professional fees could be deferred at confirmation; the committee pressed forward with conversion, reporting adjusted book cash of about $1,138,695.95 (down $49,317.57 since April 16) against professional fees of roughly $2.4 million and accruing. Judge Lane had by then postponed the disclosure statement hearing and urged the parties to resolve their differences.

Key Case Timeline

By February 2026, counsel for the debtor told the bankruptcy court that a consensual plan was within reach; the committee moved to convert the case to chapter 7 six weeks later.

Date	Event
2016	Facility enters Philipson/Landa portfolio ($67.8M acquisition)
December 2022	NY AG Letitia James files lawsuit alleging $22.6M fund diversion
April–September 2024	Resident census falls from 423 to below 350
October 2024	1199SEIU imposes restraining notices on Medicaid funds
December 17, 2024	WARN notice filed
December 20, 2024	NY AG obtains TRO blocking resident evacuation
January 2, 2025	Chapter 11 petition filed
January 13, 2025	Interim DIP order entered; sale/receivership motions filed
January 16, 2025	U.S. Trustee moves for chapter 11 trustee
January 24, 2025	1199SEIU files sale objection
January 28, 2025	Sale hearing; union deal not reached
February 5, 2025	Official Committee of Unsecured Creditors appointed
February 14, 2025	Court approves closure plan (May 15 deadline)
February 21, 2025	Examiner Leslie A. Berkoff appointed
February 27, 2025	NY DOH approves closure by May 15, 2025
March 20, 2025	Combined sale and receivership order entered
April 22, 2025	378Sywood commences operations as receiver
September 2, 2025	Initial chapter 11 plan filed
October 14, 2025	Amended plan and disclosure statement filed (2% estimate)
December 9, 2025	Interim fee order entered for ten professionals
February 9, 2026	Corrected second amended plan and disclosure statement filed
February 18, 2026	Committee discovery-enforcement orders entered
February 27, 2026	Examiner Berkoff files report on potential insider claims
March 12, 2026	Discovery rights transferred to plan administrator
March 24, 2026	M&T Bank settlement approved
March 31, 2026	Committee moves to convert case to chapter 7
April 7, 2026	Debtor objects to conversion; Greystone reserves rights
April 28, 2026	NY AG objects to disclosure statement
May 5, 2026	Committee replies in support of conversion
June 9, 2026	Dueling letters; debtor seeks mediation, committee presses conversion

Frequently Asked Questions

What caused Cold Spring Hills to file bankruptcy?

A 2022 Attorney General lawsuit alleging $22.6 million in fund diversions reduced profitable Medicare admissions, and COVID-19 cut the resident census. In October 2024, union restraining notices on Medicaid funds blocked access to operating cash, creating a liquidity crisis against a roughly $1.14 million weekly payroll. The facility was losing more than $600,000 weekly by the time of filing.

Who operates the facility now?

378Sywood LLC, controlled by Eliezer Jay Zelman, has run the facility as receiver since April 22, 2025, under a combined sale and receivership order. The purchaser paid $10 and agreed to assume Greystone's roughly $79.5 million in obligations, with permanent ownership transfer pending Department of Health approval.

What recovery will unsecured creditors receive?

The October 2025 plan estimated about 2%, but the corrected disclosure statement filed in February 2026 warns there may be no recovery at all on roughly $123.3 million of projected Class 4 claims, and the committee says the plan now depends on a single $1,000,000 settlement payment. Greystone's claim is satisfied through assumption by the purchaser outside the estate.

What is the examiner investigating?

Examiner Leslie A. Berkoff's February 2026 report catalogues potential fraudulent-transfer, preference, recharacterization, fiduciary-duty, veil-piercing, and Public Health Law claims against Bent and Avi Philipson, Benjamin Landa, and more than 20 affiliated entities, including roughly $15.39 million of insider confessions of judgment for unpaid rent. The report expressly disclaims any conclusive findings or adjudication of liability.

Why is the committee seeking to convert the case to chapter 7?

The committee moved to convert on March 31, 2026, arguing the non-operating debtor is administratively insolvent — unable to pay its roughly $2.3 million in professional fees from cash that had fallen to about $1.2 million. The debtor opposed, citing accounts receivable, DOH claims, and avoidance actions, and warned that disrupting the sale would reinstate Greystone's roughly $79.5 million claim.

Why did the New York Attorney General object to the plan?

The OAG objected on April 28, 2026 to a plan provision keeping the automatic stay in place indefinitely after confirmation, which it argued violates section 362(c)(2) and would act as a "perpetual blockade" shielding 22 non-debtor owners from the State's enforcement appeals over more than $22 million in allegedly diverted funds.

Is Cold Spring part of a larger nursing home distress trend?

Yes. Senior care facilities accounted for 25% of healthcare bankruptcies in 2024, with projections of 15 senior care bankruptcies in 2025, up from 11 in 2024. Industry-wide pressures include Medicaid reimbursement constraints, staffing shortages, union pressures, and COVID-19's long-term census impacts.

Who is the claims agent for Cold Spring Hills?

Omni Agent Solutions, Inc. serves as the claims and noticing agent and maintains the official claims register for the case.

What is the status of the bankruptcy case?

As of June 2026, the case remains pending and the disclosure statement is unapproved. 378Sywood operates the facility as receiver, the examiner investigation into insider transfers continues, and the committee's motion to convert the case to chapter 7 is unresolved, with the debtor asking the court to refer the dispute to mediation.

For related coverage of skilled-nursing and senior-care restructurings, see ElevenFlo's analyses of Senior Care Centers' Texas skilled-nursing chapter 11, LaVie Care Centers' emergence, Guardian Healthcare's 19-facility wind-down, and Avante Health Solutions' chapter 7 conversion.