“On Aug. 8, 2003, plaintiff Dan B. Lain became trustee of the assets of bankruptcy debtor Senior Living Properties
LLC (SLP), a nursing home company. Lain’s duties included liquidating the assets and using the proceeds to satisfy claims against SLP, including claims by unsecured creditors and personal injury claimants. Lain sued a surety of SLP’s, ZC Specialty Insurance Co., a subsidiary of Zurich Financial Services Group, alleging that ZC was SLP’s partner in the nursing home business and therefore liable for SLP’s debts.”
“ZURICH (Dow Jones) – Switzerland-based insurer Zurich Financial Services AG (ZURN.VX) said Tuesday that it has reached a settlement regarding the bankruptcy of a U.S. nursing home chain Senior Living Properties.
Under the agreement, Zurich will pay $47.5 million. The company said its reserves will fully cover the payment.
The settlement puts an end to a lawsuit filed by Senior Living Properties which sought damages of around $528 million from Zurich company units.”
“A recent decision by a Texas bankruptcy judge represents a precedent setting ruling of note to lenders, sureties, and insurance companies involved in structured finance transactions.
On April 22, 2004, Steven A. Felsenthal, Chief United States Bankruptcy judge of the North District of Texas, Dallas Division, entered a declaratory judgment against ZC Specialty Insurance Company a subsidary of Zurich Financial Services Group, ruling that was a partner in the ownership and operation of 87 nursing homes located in Texas and Illinois. The nursing home chain, which did business as Senior Living Properties, L.L.C. (SLP), filed for bankruptcy protection on May 14, 2002. As a partner in the enternprise, Zurich now finds itself liable for all debts incurred by the bankrupt nursing home chain. According to a subsequent lawsuit filed by the court appointed post-confirmation trustee, Dan B. Lain, Zurich is responsible for debts in excess of $500 million.”
“In this adversary proceeding, Dan B. Lain, the Trustee of the Senior Living Properties L.L.C. (SLP) Trust, requests that
the court declare that ZC Specialty Insurance Company (Zurich) was a partner with SLP in the ownership and operation of nursing homes in Illinois and Texas and that, as a partner, Zurich is liable for all of SLP’s debts. Zurich responds that it merely provided a surety bond for the payment of a substantial portion of SLP’s mortgage and, as a result, merely held a creditor-debtor relationship with SLP.”