Orianna Health Systems – Unsecured Creditors Worry that Omega is Walking Back $8mn Recovery Promise, Request Court Clarification

December 13, 2018 – The Debtors’ Official Committee of Unsecured Creditors (the “Committee”) requested an urgent Court hearing to be held on December 18, 2018 in order to clarify that a guaranteed $8mn recovery is still on the table; notwithstanding recent statements by Omega Healthcare Investors (“Omega”) that call into question Omega’s intentions under its settlement agreement with the Committee (the “Settlement Agreement”) [Docket Nos. 1269 and 1270].

 

The motion States, “Omega announced for the first time this week that it will not object to Plan confirmation, except as to the sole issue of the interpretation of the binding Settlement Agreement between Omega and the Committee. Specifically, in yet another effort to circumvent its binding agreement that it would provide the Committee a minimum guaranteed recovery amount of $8 million, Omega apparently intends to argue that the third bullet point in the parties’ Settlement Agreement regarding Omega’s recovery of $200 million cash proceeds (the ‘Disputed Term’) is a condition precedent to enforceability of the Settlement Agreement, such that the Committee would not be entitled to its $8 million minimum guaranteed recovery unless and until Omega first recovers $200 million in cash. 

 

This argument is inconsistent with the plain language of the Settlement Agreement and the uncontroverted testimony proffered during the hearing on the Committee’s Emergency Motion to Enforce Settlement Agreement [Docket No. 670]….If the Committee’s interpretation is correct and its $8 million settlement remains intact, the Committee will not contest Plan confirmation and the issues to be addressed at the hearing on Plan confirmation will be limited. If, however, the interpretation now urged by Omega is held to be correct such that the Settlement Agreement is effectively a nullity, then the Committee may vigorously contest Plan Confirmation, including potentially urging the arguments it previously made in the context of the Committee’s prior objection to Omega’s proof of claim and otherwise….To the extent either (a) Omega or the Court desires to take additional evidence regarding the contract interpretation issue; or (b) the Court rules in Omega’s favor regarding the contract interpretation issue, we request that the Court continue the Confirmation Hearing to a date subsequent to January 8, 2019.”