LaVie Care Centers: From 140 Facilities to Emergence

LaVie Care Centers, a skilled nursing operator that once ran roughly 140 facilities, completed its chapter 11 restructuring on June 1, 2025, after confirming a plan built on a global settlement among the debtors, the unsecured creditors' committee, plan sponsor TIX 33433 LLC, and Omega Healthcare Investors. The case moved through a contested DIP financing, a marketing process that drew no third-party qualified bids, a confirmation dispute over opt-out third-party releases, and a post-confirmation IRS settlement that the debtors described as a direct threat to plan consummation.

LaVie and 281 affiliated debtors filed chapter 11 petitions on June 2, 2024, in the Northern District of Georgia. The company described the filing as a strategic action to improve its capital structure and address legacy liabilities from previously divested operations. By petition date, the company had contracted to 43 licensed facilities across Mississippi, North Carolina, Pennsylvania, Virginia, and one remaining Florida location, with approximately 3,600 employees and 4,300 beds. The confirmed plan went effective nearly twelve months later, and Omega Healthcare Investors announced that the Omega-LaVie master lease had been assigned to a new entity called Avardis with monthly contractual rent unchanged.

Debtor(s)	LaVie Care Centers, LLC (281 jointly administered affiliates)
Court	U.S. Bankruptcy Court, Northern District of Georgia
Case Number	24-55507
Petition Date	June 2, 2024
Judge	Hon. Paul M. Baisier
Confirmation Date	December 5, 2024
Effective Date	June 1, 2025
DIP Facility	$20 million new-money term loan from OHI DIP Lender, LLC and TIX 33433 LLC; Omega committed $10 million (50%)

Pre-Filing Distress and Capital Structure

LaVie described itself at filing as a skilled nursing operator that had shrunk from roughly 140 facilities at its peak to the current 43. The First Day Declaration of M. Benjamin Jones, senior managing director at Ankura Consulting and the company's chief restructuring officer, attributed the contraction to pandemic-era disruption and a deliberate effort to exit underperforming locations. The declaration shows the scale of the contraction: the enterprise began 2023 with 114 facilities and divested 71 across 2023 and the first half of 2024, including 27 in the third quarter of 2023 alone and 30 in the fourth quarter of that year. By early 2023, the company had already divested more than 90 facilities, but it retained lease, trade, and litigation liabilities tied to those exited operations. The 43 remaining facilities comprised 40 skilled nursing facilities and three independent living facilities, holding a total of approximately 4,300 licensed beds spread across four landlord portfolios.

The first-day declaration tied the filing to post-COVID labor disruption, wage inflation, and rising reliance on agency staffing. Agency labor came at a premium of more than 50% over prior wage levels, and the Florida portfolio alone generated about $133 million of EBITDA losses across 2022 and 2023. Agency labor costs rose 380% between 2020 and 2022, reaching $277 million.

Management also cited decreasing liquidity and borrowing availability, rent-payment shortfalls, the risk of lease terminations, and litigation from staffing agencies and other claimants that made an out-of-court restructuring unworkable. The filing cited ongoing fallout from the COVID-19 pandemic and other industry challenges as key drivers. At filing, LaVie reported over $1.1 billion in debt, including $622 million in lease obligations.

Omega Healthcare's role. Omega Healthcare Investors, a healthcare REIT, was LaVie's largest landlord, largest secured lender, and co-provider of the DIP financing. Omega owned 30 of the 43 facilities LaVie continued to operate, with $3 million in monthly rent due under the master lease. In addition to Omega, Welltower owned nine facilities in Virginia under a master lease expiring June 30, 2037, with monthly rent of approximately $1.125 million. Three North Carolina facilities were leased from the Elderberry entities, and one Florida facility from Jacksonville Nursing Home, Ltd.

As of March 31, 2024, Omega held two term loans to LaVie totaling approximately $33.3 million with a maturity date of November 30, 2036. Omega had reserved $28.7 million against those loans, writing the exposure down to the fair value of the underlying collateral. In the quarters before the filing, LaVie had been short-paying rent: first-quarter 2024 rent to Omega came in at $4.4 million against $9.9 million due, and April rent was approximately $1.5 million against $3.2 million due. As of the petition date, Omega was owed approximately $31.95 million in unpaid rent under the master lease, plus accrued interest and fees. In addition to the master lease arrears, the prepetition ABL lenders were owed at least $34.38 million and the Omega term-loan lenders were owed at least $26.95 million, each plus accrued interest.

Omega stated that it believed the filing was a necessary step to create an operationally solvent entity with enhanced liquidity and a strengthened balance sheet, and that it committed $10 million to fund 50% of the DIP financing. Omega said it believed the current cash flow from the LaVie portfolio was sustainable and would support long-term annualized rent of $36 million. By 2025, LaVie represented around 4% of Omega's total holdings.

DIP Financing and the Committee's Objections

The final DIP order approved a $20 million new-money term loan facility from OHI DIP Lender, LLC and TIX 33433 LLC. The facility was structured as a secured junior-basis term loan, with an initial draw of $9 million advanced on June 4, 2024, and the ability to draw additional delayed-draw term loans up to the full $20 million facility amount, subject to a maximum of two draws per calendar week. The order recognized at least $34.38 million of prepetition ABL obligations and at least $26.95 million of prepetition Omega term-loan obligations, each plus accrued interest, fees, and expenses. The financing package carried standard architecture: DIP liens, superpriority administrative claims, authority to use cash collateral, adequate-protection protections for prepetition secured parties, and waivers under sections 506(c) and 552(b). The DIP lenders received first-priority liens on unencumbered property under section 364(c)(2) and priming liens under section 364(d)(1) on assets previously subject to Omega term-loan and master-lease liens. The order included a professional fee carve-out capped at $500,000 after delivery of a carve-out trigger notice, plus up to $50,000 for a potential chapter 7 trustee. The use of DIP proceeds and cash collateral was governed by an approved 13-week budget with permitted variances of up to 15% on total operating disbursements and total receipts.

The official committee of unsecured creditors objected that the DIP package was tilted toward Omega and MidCap. The committee argued the facility provided barely enough liquidity, round-tripped value back to Omega through rent, granted overbroad adequate protection and releases, and prematurely encumbered avoidance-action and commercial-tort value that should remain available for unsecured recoveries.

In reply, the debtors said no alternative financing existed on the required timeline and that the financing was necessary to keep operating and run a sale process. The debtors noted material concessions in the final package: the challenge deadline moved to September 15, 2024, the committee investigation budget rose from $50,000 to $250,000, a separate investigation carve-out of up to $350,000 was included for the committee to investigate prepetition secured obligations and liens, the committee professional budget increased, and sale milestones were extended to match the committee's requested schedule.

Marketing Process, No-Bid Outcome, and GUC Trust

Stout Capital led a court-supervised marketing process beginning June 24, 2024. The second amended combined disclosure statement and plan describes a process that circulated teasers and NDAs to more than 140 prospective buyers, sent materials to 147 parties, obtained 34 NDAs, and granted 19 parties data-room access.

The court entered bidding procedures on June 27, 2024, and set September 5, 2024 as the qualified-bid deadline. The plan materials say no qualified bids were received other than notice that the DIP lenders intended to participate. The auction and sale hearing were canceled. The debtors, the committee, and the plan sponsor subsequently negotiated a plan settlement.

Plan terms. The second amended combined plan designated Class 5 go-forward trade claims and Classes 6A, 6B, and 6C for voting. The plan described total settlement consideration in excess of $70 million, including forgiveness of the DIP facility, assumption of the modified Omega term-loan claims, payment or assumption of all allowed administrative expense and priority claims, and additional funds flowing to holders of general unsecured claims. The plan established a GUC Trust funded with $10.75 million of cash from the plan sponsor, interests in divested accounts receivable, and interests in D&O claims and related causes of action. A backstop note was structured to ensure at least $2 million of GUC Trust funding tied to receivables collections. The plan also included waivers of claims and causes of action by Omega and Powerback Rehabilitation, and the debtors assumed all of their collective bargaining agreements.

The plan estimated Class 6A OpCo general unsecured claims at approximately $83.5 million with a projected recovery of about 10.8%. Class 6B DivestCo general unsecured claims were estimated at approximately $284.6 million with a projected recovery range of 1.2% to 10.0%. The plan stated that if it were not confirmed and assets were instead transferred or the cases converted to chapter 7, the debtors believed no recovery would be available to unsecured creditors.

The plan also included release, injunction, and exculpation provisions in Article X. The court issued a separate memorandum decision on the release mechanism at confirmation.

Confirmation and the Release Dispute

Judge Paul Baisier signed the confirmation order on December 5, 2024, approving and confirming the modified second amended combined disclosure statement and chapter 11 plan. The confirmation findings state that the debtors, the committee, plan sponsor TIX 33433 LLC, and the Omega parties reached a global settlement on September 24, 2024, after September mediation sessions. The settlement terms were embedded in subsequent plan versions.

The official committee of unsecured creditors had been appointed on June 13, 2024 and reconstituted on August 30, 2024. Initial members included Healthcare Services Group, Inc., Omnicare, Inc., Twin Med, LLC, ShiftMed, LLC, CBD Services USA, LLC, Amidon Nurse Staffing, Healthcare Negligence Settlement Recovery Corp., the Estate of Nancy Walsh, and Theodore Horrobin. Recovery Corp. later left the committee after the court ruled on its standing in a related adversary proceeding the debtors had filed to enjoin Recovery Corp. from pursuing claims against non-debtor parties that shared an identity of interest with the debtors.

In a separate memorandum decision entered the same day as the confirmation order, the court addressed whether creditors and interest holders could be deemed to consent to third-party releases unless they affirmatively opted out on the relevant form. The debtors sought confirmation of a plan containing an opt-out third-party release under Article X.D.2 of the plan. Under the release mechanism, creditors in impaired Classes 3, 4, 5, 6A, 6B, and 6C received ballots with an opt-out checkbox, while unimpaired creditors in Classes 1, 2, and 9 and deemed-rejecting Classes 7 and 8 received separate opt-out forms. Creditors who voted for the plan, voted to reject but did not check the opt-out box, or took no action at all were deemed to have consented to the release.

The claims and noticing agent Verita Global sent approximately 6,400 ballots, excluding duplicates. Roughly 13% were returned, meaning approximately 5,550 creditors did not vote on the plan or return any related portion of the ballot or opt-out form. Ten objections to confirmation were filed. Three challenged the release: the U.S. Trustee's objection, Recovery Corp.'s omnibus objection, and the HHS/VA objection. Recovery Corp. reached a settlement with certain non-debtors before the confirmation hearing and withdrew its objection. The court found the HHS/VA parties lacked standing to challenge the release because they had opted out. That left only the U.S. Trustee's objection, which argued the opt-out mechanism was a nonconsensual release prohibited by the Supreme Court's June 2024 decision in Harrington v. Purdue Pharma L.P., 144 S.Ct. 2071 (2024).

The court ruled that the release was consensual, finding that parties who voted for the plan had consented, that rejecting voters who did not check the opt-out box had communicated consent, and that creditors who received materials and took no action could be deemed to have consented because creditors are obligated to read their mail in bankruptcy. However, the court required that the confirmation order provide non-respondents with an opportunity to seek relief post-confirmation to rebut the presumption of consent, finding that this safeguard was necessary given the roughly 5,550 non-responding creditors.

The confirmation briefing reflects objections from the U.S. Trustee, HHS/VA parties, the IRS, Cigna, and other parties. The debtors' confirmation brief and omnibus reply argued the third-party release was consensual because affected parties had an opt-out path.

IRS Settlement, Avardis Lease Assignment, and Emergence

IRS employee retention credit settlement. A post-confirmation dispute over the IRS's employee retention credit claim threatened plan consummation. The debtors' January 29, 2025 motion to approve the ERC settlement stated that the IRS had asserted a roughly $31 million claim, including about $29 million of priority tax exposure. The debtors described the dispute as a direct threat to going effective. The motion characterized the ERC eligibility question as an issue not yet litigated in any court, including any bankruptcy court, and warned that a final determination could have ripple effects throughout the healthcare industry because thousands of healthcare providers had applied for and received ERCs under similar circumstances.

The proposed settlement achieved a 100% reduction of the priority component of the IRS ERC claim and subordinated over $9 million (more than 30%) of the claim to other general unsecured creditor recoveries. Instead of receiving millions of dollars ahead of unsecured creditors as a priority claimant, the IRS was moved into general unsecured treatment across Classes 6A and 6B. The settlement reduced projected Class 6A recovery from about 10.8% to 10.0%. Judge Baisier approved the ERC settlement on February 13, 2025. The debtors had described the dispute as the remaining obstacle to going effective.

Emergence. The notice of effective date confirmed the plan became effective on June 1, 2025. On the same date, Omega Healthcare Investors announced that the Omega-LaVie master lease had been assigned to a new entity called Avardis. Monthly contractual rent under the Avardis lease remained the same as the legacy LaVie master lease.

Professionals and fees. McDermott Will & Emery served as debtors' counsel. Ankura Consulting Group served as restructuring advisor, providing CRO support through M. Benjamin Jones, a senior managing director. Stout Capital served as investment banker. Chapman and Cutler LLP served as special counsel to independent manager James D. Decker, who conducted an independent investigation into potential causes of action held by the debtors against non-debtor affiliates, equity investors, Omega, and other parties as part of the plan process. Troutman Pepper served as counsel to the unsecured creditors' committee, and FTI Consulting served as the committee's financial advisor.

Final fee applications were filed in July 2025. McDermott sought approximately $9.0 million in compensation and expenses for June 2, 2024 through June 1, 2025. Troutman sought approximately $2.2 million in compensation and expenses, and FTI sought approximately $1.7 million in compensation and expenses for the same period. Fee orders entered in late August 2025 indicate the applications moved through final approval.

Key Timeline

June 2, 2024	LaVie and 281 affiliates file chapter 11 petitions
June 5, 2024	Court enters interim DIP/cash collateral order
June 24, 2024	Stout Capital launches marketing process
June 28, 2024	Court enters final DIP order
July 23, 2024	Debtors file combined disclosure statement and first amended chapter 11 plan
September 5, 2024	Qualified-bid deadline passes with no third-party bids
September 24, 2024	Global settlement reached after mediation
December 5, 2024	Court confirms plan and issues release memorandum decision
January 29, 2025	Debtors move to approve IRS/ERC settlement
February 13, 2025	Court approves IRS/ERC settlement
June 1, 2025	Plan effective date; master lease assigned to Avardis

Frequently Asked Questions

What happened to LaVie Care Centers?

LaVie Care Centers, an operator of 43 skilled nursing facilities, filed chapter 11 on June 2, 2024, in the Northern District of Georgia. The court confirmed a modified second amended plan on December 5, 2024, and the plan became effective on June 1, 2025. Omega Healthcare Investors' master lease was assigned to a new entity called Avardis at emergence.

Who is the claims agent for LaVie Care Centers?

Kurtzman Carson Consultants LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

What caused LaVie Care Centers to file for bankruptcy?

The company attributed the filing to post-COVID labor disruption and wage inflation, with agency labor costs rising 380% between 2020 and 2022. LaVie also carried legacy liabilities from more than 90 divested facilities and faced rent-payment shortfalls, decreasing liquidity, and creditor litigation that made an out-of-court restructuring unworkable.

Who provided DIP financing for LaVie Care Centers?

OHI DIP Lender, LLC and TIX 33433 LLC provided a $20 million new-money term loan facility. Omega Healthcare Investors committed $10 million, representing 50% of the facility.

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