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Woman in a nursing home, file 2010. REUTERS Enrique Castro-Mendivil

Nursing homes seek bankruptcy over work contracts

2/26/2013 COMMENTS (0)

By Tom Hals

Feb 26 (Reuters) - Five nursing homes in Connecticut filed for bankruptcy seeking to quickly impose temporary new employment terms on their unionized workers, just weeks after the U.S. Supreme Court declined to intervene in their labor dispute.

On Feb. 4, the U.S. Supreme Court denied an emergency application by the nursing homes' operator, HealthBridge Management LLC, which wanted a stay of a federal court injunction reinstating 700 striking workers.

The nursing homes said in a filing Sunday with the U.S. Bankruptcy Court in Newark, New Jersey, that they cannot obtain a $5 million bankruptcy loan needed to keep the doors open if they are unable to impose the temporary terms on the union.

HealthBridge itself did not seek bankruptcy.

Imposing new terms would save the homes $1.3 million per month, according to court documents. "Without the interim modifications, the debtors will be required to cease operations, relocate all of their patients and terminate all of their employees."

They have requested a Friday hearing before U.S. Bankruptcy Court Judge Donald Steckroth.

"Since the appeals process didn't work in its favor, the company is now trying to use bankruptcy to avoid its legal obligations to employees under the injunction," David Pickus, the president of the New England Health Care Employees Union, said in a statement.

He said if the homes are in such dire financial straits, the state should put them into receivership.

The union represents the workers at the five nursing homes, the Long Ridge of Stamford, Newington Health Care Center, Westport Health Care Center, West River Health Care Center and Danbury Health Care Center.

While companies often ask bankruptcy judges to impose new terms on a unionized workforce, such requests generally come after the company has spent months negotiating with its unions in bankruptcy. Several bankruptcy attorneys told Reuters they had never seen such a request along with the initial motions in a case.

The labor problems at the nursing homes have been simmering for years.

The collective bargaining agreements expired in 2011. After talks on a new contract hit an impasse, the nursing homes' management company imposed modified terms on the union, which responded by striking.

Eventually, a federal court in Connecticut ordered the management company to reinstate the union workers under the terms of the expired bargaining agreement. That order takes effect on Sunday.

Other companies have filed for bankruptcy with union contracts as a central focus, most notably Hostess Brands. The company famous for its Twinkies snack cakes is currently liquidating after it received court approval to impose new terms on its unions, which then went on strike. Hostess said it was unable to reorganize, blaming the union walk-out.

The lead nursing home case is 701 Long Ridge Road Operating Company II LLC, U.S. Bankruptcy Court for New Jersey, No. 13-13653.

For the debtor: Michael Sirota of Cole Schotz, Meisel, Forman & Leonard.

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