Nursing-home property owner fights creditor’s receivership request

FORT COLLINS — The owner of the Loveland property on which a nursing home sits is pushing back in Larimer County District Court against a creditor who wants the property placed into receivership until it can be sold at a foreclosure sale this fall.

In a filing on July 3, Wapello Holdings LLC asked the court to approve “ex parte” appointment of a receiver. An ex parte decision is one decided by a judge without requiring all of the parties to the dispute to be present. That request followed a ruling a week earlier by the U.S. Bankruptcy Court in Denver that dismissed a Chapter 11 bankruptcy filing by North Shore Associates LLP, owner of the property on which the North Shore Manor nursing home operates, allowing foreclosure to begin on the building. In that order, U.S. Bankruptcy Court Judge Joseph G. Rosania Jr. denied a motion to turn over cash collateral that had been filed by Wapello Holdings and J. Robert Wilson, who owns nursing home operator Columbine Management Services Inc. and 15% of North Shore Associates.

However, North Shore Associates last Friday filed a strongly worded brief opposing appointment of a receiver, calling Wilson a “rogue insider” who wants “to seize for himself” more than $10 million in equity from the property it owns.

The brief, prepared by the Denver law firm Foster Graham Milstein & Calisher LLP, alleges that “Wilson is a disgruntled former officer of NSA who, after being removed from his post for years of illicit dishonesty, formed Wapello to gain financial leverage through a fraudulent assignment of a 2016 promissory note executed by NSA in favor of the Bank of Oklahoma (BOKF). In the course of doing so, Wilson not only secretly negotiated  with BOKF in his self-interest to the exclusion of his partners, but he also induced the bank to refrain from communicating with its Borrower to avoid a default.

“Wilson’s actions, both directly and through Wapello, are in clear violation of applicable law, negate any status Wapello may attempt to claim as a holder in due course of the note, and in fact, mandate that the note be discharged,” the brief said. “The court need look no further than the plain language of NSA’s partnership agreement to determine that the relief Wilson is seeking through Wapello is prohibited by law.”

In a footnote, North Shore Associates alleged that, “despite the exigency with which plaintiff filed its ex-parte complaint following NSA’s dismissal from bankruptcy and on the eve of a holiday long weekend, having failed to achieve the secret relief it sought, plaintiff has thus far not bothered to serve the borrower with a summons and complaint.”

In seeking the appointment of a receiver, Wapello had said it was not requesting that the receiver “hold any responsibility for, or authority over the health-care services that [North Shore Manor] provides to residents, the medical records located on the real property collateral, or any of the business equipment owned by” the nursing home.

Wapello claims it is owed more than $2.3 million from a loan North Shore Associates took out in 2016 but went into default on March 7, the day after North Shore filed for bankruptcy.

When Wilson was managing North Shore Associates, he took out a loan for nearly $2.5 million with BOKF NA, doing business as Bank of Oklahoma, in 2016 and used the real estate to secure it. Then, prior to the loan’s due date, he created Wapello Holdings LLC and bought out the loan, including all its terms and conditions, which included a lien on the property. 

North Shore Associates 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.

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

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: Wapello Holdings LLC v. North Shore Associates LLP, Chapter 11 in Larimer County District Court, case number 2024 CV 30569.