420-D:16 Rehabilitation, Liquidation, or Bankruptcy. –
I. The commissioner may, if it is in the best interest of the residents, petition a court of competent jurisdiction to appoint a trustee to rehabilitate or liquidate a facility. Such rehabilitation or liquidation shall occur only if the commissioner finds, after proper notice and hearing, any of the following:
(a) That a provider is insolvent or bankrupt or in danger of becoming insolvent or bankrupt.
(b) That a provider has failed to maintain required liquid reserves under RSA 420-D:8.
(c) That any part of the reserve fund escrow amount under RSA 420-D:10 has been or is about to be released in violation of RSA 420-D:10.
(d) That a provider has been or is about to become unable to meet the cash flow or income projections for the period.
(e) That the certificate of authority has been suspended or revoked.
(f) That the provider named in a certificate has conducted a transfer or sale described under RSA 420-D:13 without prior notification and approval by the commissioner.
II. (a) A rehabilitation order shall authorize the commissioner, or the trustee, to:
(1) Take possession of the property of the provider, including all facilities owned by the provider within the state;
(2) To operate the facility, directly or through a manager, including the employment or discharge of any facility employees as the commissioner or trustee may determine necessary; and
(3) To manage the facility and take other measures the court may direct as necessary.
(b) The commissioner, trustee, provider, or the court on its own motion may petition for removal of a rehabilitation order and return the management of the facility to the provider, if the provider demonstrates that the objectives of the original order have been met and that no further jeopardy to the residents exists. A rehabilitation order shall contain an automatic stay, staying any collection actions by a secured or unsecured creditor against the receivership estate. Relief from the stay may be requested by a party in interest in the receivership proceedings.
III. If attempts to rehabilitate the facility fail, the commissioner may apply to the court for an order to liquidate. A liquidation order shall not require a prior rehabilitation order. An order to liquidate shall automatically revoke the certificate of authority for all facilities of the provider and shall include an order to liquidate all facilities owned by such provider.
IV. In applying for an order to rehabilitate or liquidate, the commissioner shall consider the best interests of the residents who have contracted for continuing care at the facility. The proceeds, if any, of liquidation shall be paid to other providers as full or partial entrance fees refunds for the affected residents who will need to move or shall otherwise be paid to the residents of the facility being liquidated. Except as provided in paragraph V, in the event of state court liquidation, all continuing care contracts with a provider shall be deemed preferred claims against the assets of the provider. A preferred claim shall be paid ahead of operating expenses, but behind secured debt. Providers shall be obligated to place residents in other qualified facilities as part of any liquidation.
V. A provider may avoid a rehabilitation order by posting a bond in an amount which is satisfactory to the commissioner. The bond shall be from a maker in this state who is acceptable to the commissioner and shall be in favor of the commissioner on behalf of those entitled to refunds or damages. It shall be in an amount sufficient to cover any refunds due to the residents plus other amounts as determined necessary by the commissioner in order to protect the residents. Nothing in this chapter shall be construed to impair the priority, with respect to the lien property, of mortgages, security agreements, lease agreements, or installment sales agreements on property not otherwise encumbered which have been entered into by a provider with an issuer of bonds or notes and bonds which are secured by a resolution, ordinance, or indenture of trust if such mortgages or agreements were duly recorded at least 4 months prior to the institution of liquidation proceedings.
VI. In the event of a federal bankruptcy court proceeding, the department and the department of health and human services may appear in the proceeding as a party in interest to protect the interests of the residents and the state of New Hampshire.