Southern Healthcare Sys. Inc. v. Health Care Capital Consol. Inc.

The defendant was in contempt for violating an injunction against managing its own health care facilities, even though a senior lender insisted that the defendant continue its own management.

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In Southern Healthcare Sys. v. Health Care Capital Consolidated, 273 Ga. 834 545 SE2d 882 2001, this Court affirmed the trial court’s order enjoining Southern Healthcare Systems SHS from managing its own health care facilities and requiring it to obtain HCCC’s approval of a third-party manager of the facilities. Because HCCC are the junior lenders, the note evidencing the indebtedness owed to HCCC by SHS was subordinate to that held by the senior lenders, including Bank One. Bank One is not a party to the lawsuit, but the trial court gave it “a role in the approval process by requiring HCCC to approve a manager of the facilities in conjunction with the senior lenders.” Southern Healthcare Sys., supra at 835-836 5.

Notwithstanding our affirmance of the trial court’s order, SHS continued to manage the facilities, at the apparent insistence of Bank One. Accordingly, HCCC filed a motion for contempt. After conducting a hearing, the trial court concluded that Bank One was a “stumbling block” to SHS’s compliance and that, by refusing to participate in the selection of an independent manager, the senior lender had “effectively written itself out of the management selection process.” Citing OCGA § 9-8-1 and 23-4-31, the trial court ordered SHS and HCCC to reach an agreement on naming an independent manager or, in the event they did not, a receiver would be appointed to manage SHS’s assets. SHS filed this appeal from that order.

Southern Healthcare Sys. Inc. v. Health Care Capital Consol. Inc.

The defendant was in contempt for violating an injunction against managing its own health care facilities, even though a senior lender insisted that the defendant continue its own management.

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