Federal authorities challenge Orianna bankruptcy plans; skilled nursing chain wants others protected

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Orianna Health System's plan to shift more than half its skilled nursing facilities to its landlord may be in trouble.

The U.S. government has come out against the Tennessee-based chain's bankruptcy plan to protect companies acquiring its facilities from existing liabilities, Reuters reported Tuesday.

Operated by 4 West Holding Inc, Orianna Health Systems has 43 skilled nursing centers with almost 4,500 beds across seven states.

Orianna was seeking a court order that would allow the company to transfer some assets free of liability, but Reuters reported government officials have said that is not permitted under Medicare rules.

Orianna filed for Chapter 11 on March 6 to begin what it called a “comprehensive financial restructuring.” Plan details call for the company to transition 22 facilities to Omega, Orianna's long-time landlord.

“Our management team decided this was the best path forward for our company and is confident in our ability to use this orderly, proven process to achieve a comprehensive debt solution as efficiently as possible,” the company said in a statement last month.

The remaining 20 facilities were to be restructured under a Chapter 11 plan.

A call seeking comment from Orianna's corporate office Wednesday was not returned before production deadline.

The company has said that business will run as usual during restructuring.