In a recent article, McKnights Senior Living reported that the Supreme Court said it will review a case involving the constitutionality of Chapter 11 bankruptcy fees.
The publication turned to finance and restructuring partner and co-leader of the firm’s senior living and care team George Mesires for insight on the case.
“What this case underscores for me is that, however the court rules, bankruptcy cases for senior housing operators are expensive,” shared Mesires. “Quarterly trustee payments are just the tip of the iceberg, so whether such fees are capped at $30,000 as they were before the Bankruptcy Judgeship Act of 2017, or at $250,000 as currently formulated, the burden of administrative expenses is heavy.”
The publication stated that the case stems from a 2017 law that hiked the government fees most large companies in bankruptcy must pay.
“As an industry, senior housing operational expenses run high, so these quarterly fees, which are based on disbursements, will also run on the high side,” Mesires added. “It’s not difficult to see why bankruptcy should be an option of last resort for senior housing operators when there are effective out-of-court tools to sometimes accomplish the same goal.”