North Shore bankruptcy filing dismissed

DENVER — A federal court has dismissed a Chapter 11 bankruptcy filing by North Shore Associates LLP, owner of a property on which the North Shore Manor nursing home sits, allowing foreclosure to begin on the building.

However, in an order finalized Monday in U.S. Bankruptcy Court in Denver, Judge Joseph G. Rosania Jr. denied a motion to turn over cash collateral that had been filed by creditor Wapello Holdings LLC and J. Robert Wilson, who owns nursing home operator Columbine Management Services Inc. and 15% of North Shore Associates.

The motion to dismiss had been filed by the bankruptcy trustee, who said North Shore Associates had failed to follow court procedure by regularly filing financial reports and had not paid the trustee for services as required. Another motion to dismiss was filed by Wapello and Wilson.

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When Wilson was managing North Shore Associates, he took out a loan with BOKF NA and used the real estate to secure it. Then, prior to the loan’s due date, he created a new company called Wapello Holdings LLC and bought out the loan, including all its terms and conditions, which included a lien on the property. With interest increasing by the day, the debt has surpassed $2.2 million.

North Shore and Columbine Management Services Inc. have battled for more than a year, both in bankruptcy court and in Larimer County District Court, over control of the nursing home at 1365 N. 29th St. in Loveland. Majority owners, who have 85% of the shares, claim that Wilson with his 15% and his Columbine companies improperly used his control as managing partner to divert money from the organization by overcharging for supplies and services. Wilson sought payment for those supplies and services.

North Shore Associates had asked the bankruptcy court to deny the trustee’s motion to dismiss the bankruptcy.

A case filed under Chapter 11 of the U.S. Bankruptcy Code is frequently referred to as a “reorganization” bankruptcy, in which the debtor usually continues to operate as a business, remains in possession of its property and assets, has the powers and duties of a trustee, and may, with court approval, borrow new money.

An attorney for North Shore told BizWest her clients had not authorized her to speak on the case, and no comment was available from Paul Benigni, CEO of Columbine Management Services.

Wapello supported the trustee’s motion to dismiss and sought payment of all of North Shore Associates’ cash.

“The dismissal is contingent on the payment of the fees owed to the United States Trustee,” Rosania wrote. “The turnover of cash collateral by the debtor to movants is denied. The order granting the motion to dismiss will be stayed for 14 days. Movants are to file a new proposed order with the court.”

“Granting relief from stay does not displace the residents (of the nursing home). It simply means that the building will be lender-owned,” meaning owned by Wilson’s company Wapello Holdings, Wapello wrote in its filing.

A related bankruptcy involving North Shore Manor, the nursing home operating company, was dismissed last October and followed by lawsuits between majority shareholders of the nursing home and entities controlled by Wilson and his Columbine Management Services family of companies.

The case is: North Shore Associates LLP, Chapter 11 case number 23-10808 in U.S. Bankruptcy Court for the District of Colorado.