In Re Allen Care Centers, Incorporated, an Oregon Corporation, Debtor. State of Oregon, Department of Human Resources v. Ronald Witcosky, Trustee
Opinion
Opinion
In a Chapter 7 bankruptcy proceeding, the State of Oregon’s Department of Human Resources (“Department”) claimed administrative expense priority for costs incurred by a state court-appointed trustee in closing a nursing home operated by debtor Allen Care Centers, Inc. The bankruptcy court denied the claim. In re Allen Care Ctrs., Inc., 163 B.R. 180 (Bankr.D.Or.1994). The district court affirmed, In re Allen Care Ctrs., Inc., 175 B.R. 397 (D.Or.1994), and the Department timely appealed. We have jurisdiction pursuant to 28 U.S.C. §§ 158 (d) and 1291, and affirm.
I.
Allen Care, which operated three state-licensed nursing and residential care facilities, filed for Chapter 11 bankruptcy protection on December 10, 1990. Shortly thereafter, it notified the Department that one of its facilities, Care West, was suffering “intolerable losses and negative cash flow.” The Department suggested that pursuant to an Oregon statute, it could ask a state court to appoint a trustee to oversee the operation of Care West.
The statute in question, Or.Rev.Stat. § 441.286, allows a state court to appoint a trustee when “the health and welfare of patients in a facility are now or in the immediate…