Lender seeks a second reversal of court-ordered receivership

FORT COLLINS — A company that received an emergency, court-ordered receivership of a memory care facility in Fort Collins only to have the judge reverse the decision a few days later now asks the judge to reverse himself again.

New York-based BRMK Lending LLC, in a motion filed Tuesday in Larimer County District Court, wrote that the court erred in agreeing with the state Attorney General’s argument that the original receivership violated the law.

The case involves Fort Collins Memory Care LLC, which operates the Aspens at Fort Collins, 3150 Rock Creek Drive, and its lender, BRMK Lending, also known as Broadmark Realty Capital Inc. (NYSE: BRMK). BRMK sought the receivership because of what it described as imminent danger to the property from a defective sprinkler system. The judge originally agreed to the receivership until the state entered the case and argued that the appointed receiver was not licensed by the state to operate a memory care facility and had not followed state law designed to protect vulnerable memory care patients. 

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The judge reversed course, giving control of the facility back to Fort Collins Memory Care.

But on Tuesday, BRMK said that the original receivership was not an “equity or corporate receivership” but an “asset receivership.” It said that Fort Collins Memory Care has always had operational control of the patient care at the facility. 

“The state, through conclusory statements and misinterpretation of the express terms of the order appointing a receiver, and without reference to law applicable to receiverships, seeks to fundamentally alter commercial lending in Colorado, interfere with private contract rights and ultimately put its citizens at risk based upon mere belief and speculation,” BRMK wrote in its motion.

BRMK said that Fort Collins Memory Care, which has a pending construction-defects lawsuit against contractor Brinkman Construction Inc., Holsinger Drywall Inc. and Total Fire Protection Inc. about the sprinkler system, which it amended after the date of the original receivership, shows that it understands that the receivership is not “an equity or enterprise operation receivership.”

Using language from that construction-defects lawsuit, BRMK argued that its original intention to protect the real estate from damage was the reason for the original request and for the need for the emergency order.

“BRMK did not intend to, nor did it, seize operational control of the facility through a receivership,” the motion said. It asked the court to restore the receivership so that it can make the repairs to the fire-suppression system.

Noah Drever, CEO of Fort Collins Memory Care, said that the original receivership did strip operational control from his company and it wasn’t until the judge reversed the receivership that it regained control under its license with the state.

He said his company has continued to attempt contacts with its lender to seek an agreement on repayment of its note but has not received a call back. He also told BizWest that in addition to the construction-defects lawsuit, it is engaging another contractor to replace the sprinkler system, which he said is not an imminent threat to residents now.