In Re Aurora Memory Care, LLC

589 B.R. 631 (2018)

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Nature of the Case

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Facts

P operates a health care facility. The 100% owner of P is Aurora Real Estate and Property Investments, LLC (ARE) which is itself a debtor in a chapter 11 case. Taher Kameli, a Chicago immigration lawyer, owns 100% of ARE. Kameli established investment vehicles for foreign nationals interested in gaining U.S. citizenship through the U.S. Citizenship and Immigration Service's EB-5 Program. The EB-5 Program extends citizenship to immigrants who invest in designated U.S. businesses that create a certain number of jobs. In April 2017, the SEC brought a civil enforcement action against Kameli. P was named in the action as a 'relief defendant,' meaning that it was not accused of any wrongdoing but was joined to have it disgorge monies received as a result of the wrongdoing of other defendants. The SEC defendants have since moved to dismiss the SEC's complaint. Those motions are pending. In 2015, Bank loaned P $6.5 million. The loan was secured by a mortgage on P's property as well as pledges of ARE's ownership interest in P and Kameli's ownership interest in ARE. Kameli also personally guaranteed the loan. The loan matured on December 1, 2016. P failed to repay it and Bank filed to foreclose on the mortgage and recover on the note. On April 18, a creditor of P, Meridian Senior Living, LLC, filed an involuntary chapter 11 petition against P. AMC failed to file a list of creditors and other entities, its schedules, statement of financial affairs, and other documents prompting the U.S. Trustee to move to convert or dismiss the case. The SEC joined in the motion. P eventually filed the required documents. P has filed no monthly operating reports as sections 1106(a)(1) and 704(a)(8) require. The schedules filed raise questions about the value of its facility; it is either $10 million or $16 million. The schedules disclosed $8.561 million in secured debt and $13.206 million in unsecured debt. P has yet to propose a plan. P claims it has secured $10 million in financing from T2 Capital Management and has produced a letter of intent. It has several contingencies, one of which is the dismissal of P with prejudice as a party to the SEC action. No agreement has been reached with the SEC. Kameli conceded at his deposition that even the T2 financing would not be enough for P to make a go of it. P would need to 'increase the number of occupants from 44 to 55 to support the debt.' According to the receiver, full occupancy of 60 residents would give generate an annual total revenue of $3,659,307 and an annual net operating income of $554,000 which would leave $26,662 each month, for debt service. Bank moved under section 1112(b) to convert or dismiss the case.