GMF ELCM Fund L.P., et al.
ELCM HCRE GP LLC, et al.
Submitted: April 2, 2019
E. Ross, Esquire, Bradley R. Aronstam, Esquire Ross Aronstam
& Moritz LLP
White, pro se
William B. Chandler III, Esquire Wilson Sonsini Goodrich
GLASSCOCK III VICE CHANCELLOR
Counsel and Mr. White:
Letter Opinion follows the Rule to Show Cause hearing, held
on March 29, 2019 at 9:30 am. I begin with a brief recitation
of the facts relevant to this Opinion; I note that, after
several days of hearings,  there is far more evidence than
warrants discussion in this Opinion of limited scope.
litigation involves a business that acquires and operates
nursing homes, which once operated facilities in several
states. The business consists of a complicated web of
entities (the "Vehicles"). For purposes of this
Opinion, rather than delve into the nuances of the
business's organizational chart, I note only that some of
these entities are wholly-owned by Defendant Andrew White.
The Plaintiffs are investors in the Vehicles.
Vehicles are, simply put, in trouble. They are battling
litigation and state-initiated proceedings in a number of
other states, most notably Vermont and North
Carolina. This is not merely a case of an entity
that needs a receiver to manage its business or to assist in
winding up its affairs. The nature of this business is
nursing care, and as a result, negligent or incompetent
leadership affects vulnerable people, whose lives are
affected by these Vehicles' fates; residents at the
nursing homes, whose health, care, and wellbeing depend on
the Vehicles' proper management. Though yet unproven in
this case, there are allegations that the delivery of food
for the residents has been interrupted. There is evidence
that residents' rent checks have gone uncashed, leaving
them to question whether their housing is assured. There is
evidence that residents have been
"evacuated" from certain facilities. There is evidence
that employees who provide direct care to residents have, on
multiple occasions, not been paid on time-sometimes days or
even weeks late. I note this not to suggest that cases
involving other business entities lack importance, nor that
they cannot also be disruptive of human lives-they can be,
and often are. What I do mean to suggest is that the
exigencies of this particular business compel especially
light of this, the Plaintiffs-who, again, are investors in
the Vehicles-filed suit on November 11, 2018, alleging breach
of fiduciary duties and breach of contract. Along with the
Complaint, they filed a Motion to Expedite and a Motion to
Appoint a Receiver Pendente Lite. I entered an
Interim Status Quo Order on December 12, 2018. A hearing on
the Motion to Appoint a Receiver Pendente Lite was
rescheduled on numerous occasions between December 2018 and
January 2019, and was ultimately held on January 30, 2019.
Various discovery motions were filed in the interim. On
January 17, 2019, the Defendants filed a Motion to Stay the
proceedings pending decision from a Vermont court regarding
nursing facilities there; I denied the Motion to Stay on
January 18, 2019.
eve of the hearing on the Motion to Appoint a Receiver
Pendente Lite, then-counsel for the Defendants
informed the Court that Mr. White would be unable to attend
because he had been admitted to the hospital and had not been
cleared to travel to Delaware; as such, he could not testify
at the hearing on January 30. Given that the hearing had
already been rescheduled (by my count, at least three times,
and on at least one occasion due to Mr. White's schedule
and preferences), and given that Mr. White's counsel was
present and ready to proceed, I informed the parties that the
evidentiary hearing would commence without Mr. White. After
that day's testimony, and based on evidence generated at
that hearing, on January 30, 2019 I ordered that an interim
receiver be appointed. I ordered that when Mr. White was able
to travel, the evidentiary hearing would continue, at which
time he could testify, and that I would then consider whether
a receiver should be appointed pendente lite. With
the parties' agreement, I appointed William B. Chandler
III (the "Receiver") to serve as interim receiver
on February 7, 2019, and ordered specifically that Mr. White
cooperate with the Receiver, so that the Receiver could
efficiently operate the business pending a decision on
appointment pendente lite.
continued evidentiary hearing was held on February 14 and 15,
2019. Mr. White appeared; however, his testimony was,
frankly, disturbing. It was often rambling and, to my mind,
non-linear. Moreover, parts of the testimony were
incomprehensible, and Mr. White needed frequent reminders to
slow down and speak clearly for the court reporter. At the
conclusion of the hearing, I asked the parties for additional
February 26, 2019, the Receiver requested an office
conference, which was held on February 28. At that time, the
Receiver described his interactions with Mr. White and
expressed serious concern about the Vehicles' operation.
The Receiver detailed instances where Mr. White was
unresponsive to the Receiver's requests for information,
instances where the Receiver had been blindsided with matters
needing immediate attention (but of which he was informed
only at the last minute), such as approving payroll, and
instances where Mr. White acted unprofessionally toward the
Receiver. Mr. Chandler indicated that Mr. White had not yet
provided him with access to the Vehicles' bank accounts.
Mr. Chandler also requested to withdraw as receiver. Mr.
White's counsel attended, but was unable to explain
White's lack of cooperation to my satisfaction.
indicated that I would grant the Receiver's motion to
withdraw as soon as a successor receiver was identified. I
also asked the Receiver to produce a list of the documents
and information that would be necessary for a receiver to
operate the Vehicles successfully, and I ordered Mr. White to
produce those documents by a time certain, once identified.
If he did not produce them in a timely fashion, I indicated
that I would issue a Rule to Show Cause why he should not be
held in contempt. Mr. Chandler filed the list of necessary
items on March 1. I ordered Mr. White to produce that
information by March 11, 2019.
on March 6, the Defendants' counsel filed a Motion to
Withdraw their representation. On March 11, I ruled that the
Defendants should find successor counsel in a timely ...