Tri-Borough Home Care, Ltd - Chapter 11 Case Summary

Business Description

Tri-Borough Home Care, LTD, formerly known as Tri-Borough Home Care Division, LTD and also known as Family Care Pediatric Home Care (the "Debtor" or the "Agency"), is a licensed provider of home care services, accredited by the New York State Department of Health in the New York City area, with offices located at 1414 Utica Avenue, Brooklyn, NY 11203.

• The Debtor provides a wide range of home care services, including assisting patients with feeding, ambulation, bathing, toileting, personal grooming, money management, general cleaning, shopping, laundry, meal preparation, and other basic living needs as required.
• The Agency currently serves 85 patients: 69 adults receive Assistance with Daily Living (ADL), and 15 children receive Care-at-Home (CAH) nursing services.

The Agency employs approximately 250 Home Health Aides and 15 Nurses, along with 10 administrative staff.

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Corporate History

The Debtor was licensed in 1997 by the Department of Health to provide Home Health Aides and Personal Care Services. No shares of stock, debentures or other securities of the Debtor or any subsidiary of the Debtor are publicly held, and there is no other or prior bankruptcy case filed by or against the Debtor.

Directors, Officers and Affiliates

• Kenrick Cort, President, 5114 Glenwood Rd., Brooklyn, NY 11234.

The Family Aides Entities and the Schnell Matter

• William Schnell was the former owner, president, and sole shareholder of Family Aides, Inc., Family Aides Certified Services of New York City, Inc., and Family Aides Certified Services of Nassau, Suffolk, Inc.
  • In 2007, Mr. Schnell was convicted of Medicaid fraud and fined $19.7 million in a matter brought by the New York State Attorney General.
• In 2012, the New York State Department of Health approved a management arrangement under which a Tri-Borough affiliate managed Family Aides Certified Services.
  • Tri-Borough's records reflect that the applicable agreement did not provide for Tri-Borough's assumption of the Family Aides entities' legacy liabilities.

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Operations Overview

Field visits to a patient's home are conducted by registered nurses, field specialists, and the support liaison between patients, families, and all medical professionals involved in the patient's care.

Assets

• The Debtor does not own any assets outside the territorial limits of the United States.
• None of the Debtor's property is in the possession of any custodian, public officer, mortgagee, pledgee, assignee of rents, or secured creditor, or any agent for such entity.

Thirty-Day Budget

The Debtor estimates income of approximately $591,612.76 and total operating expenses of $272,870.57 for the next thirty days, consisting of:

• Operating Payroll Expense: $102,404.27
• Workers' Compensation: $21,818.37
• Liability Insurance Expense: $4,021.80
• Disability Insurance: $8,235.03
• Medical & Life Insurance: $12,030.98
• IT Expenses: $4,522.39
• Advertising and Printing: $1,408.01
• Postage: $1,150.18
• Rent: $39,137.00
• Utilities: $7,472.66
• Office Supplies: $1,215.36
• Janitorial and Cleaning Expenses: $2,905.77
• Telephone, Fax, and Computer: $7,655.32
• Bank and Finance Charges: $7,371.25
• Office Expense: $1,740.05
• Unemployment Insurance: $20,174.97
• Repairs and Maintenance: $29,607.16

Except as otherwise indicated, all facts presented in the Declaration are based on the personal knowledge of the Debtor's President, his review of relevant documents, information provided to him by employees under his supervision, or his opinion formed from experience, knowledge, and information regarding the Debtor's operations. Unless otherwise indicated, the financial information contained in the Declaration is unaudited and provided on a consolidated basis.

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Prepetition Obligations

Tax Liens

• Taxing authorities have filed liens against the Debtor totaling approximately $14,556,132.80, and the Internal Revenue Service ("IRS") levied upon the Debtor's prepetition bank accounts.

Legacy Medicaid Liabilities and Unpaid Receivables

• The Debtor provided contracted home-care services through the Schnell-controlled entities but was not paid for substantial amounts invoiced. The Debtor's records reflect that Family Aides Certified Services of New York City, Inc. closed while owing Tri-Borough approximately $1,384,000.00, and Family Aides Certified Services of Nassau, Suffolk, Inc. closed while owing Tri-Borough approximately $470,000.00.
• In addition, billing restrictions involving Family Aides Certified Services of Rockland resulted in approximately $177,127.00 remaining unpaid.
• The Debtor's records further reflect that approximately $2,535,729.23 has already been recovered from Tri-Borough and its affiliates on account of these legacy Medicaid liabilities.

Litigation

• The following lawsuits are currently pending against the Debtor:
  • Avisue Lender LLC v. Cort & Modas Associates, et al.
  • An action against Tri Borough Certified Home Care LTD (plaintiff name and index number not legible in the source).
  • Corbin, et al. v. Tri-Borough Home Care, et al.
  • Deborah Trapp v. Tri-Borough Home Care, et al. (Index No.: 513703/2020).

Other Matters

• The Debtor does not expect to assume any obligations which will remain unpaid during the next thirty-day period.
• There has not been a committee of unsecured creditors organized prior to the order for relief in the Debtor's Chapter 11 case.
• The Debtor and the Debtor's counsel reserve the right to amend the Declaration in accordance with applicable case law, statutory provisions, and rules.

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Events Leading to Bankruptcy

Tax Enforcement and Liquidity Deterioration

The Debtor is experiencing severe and continuing financial distress. Taxing authorities filed liens against the Debtor totaling approximately $14,556,132.80, and the IRS levied upon the Debtor's prepetition bank accounts.

• These enforcement actions significantly depleted the Debtor's available working capital, materially impaired its liquidity, and jeopardized its ability to satisfy essential operating obligations, including payroll, insurance premiums, rent, and expenses necessary to maintain continuity of patient care.

Legacy Medicaid Liabilities and Recoupments

The Debtor's financial condition has also been materially affected by legacy Medicaid-related liabilities and unpaid receivables associated with entities formerly owned and controlled by William Schnell. According to the Debtor's books and records, those legacy liabilities and related losses originated in substantial part from the criminal actions of Mr. Schnell, rather than from fraud or misconduct by the Debtor's current owner or management.

• The Debtor provided contracted home-care services through the Schnell-controlled entities but was not paid for substantial amounts invoiced.
• Although Tri-Borough's records reflect that the 2012 management agreement did not provide for Tri-Borough's assumption of the Family Aides entities' legacy liabilities, the Department of Health nevertheless began recouping overpayments attributed to Family Aides Certified Services of New York City, Inc. from Tri-Borough entities.
• These legacy losses and recoupments, together with unrecovered patient losses and the reduced census following the COVID-19 pandemic, have materially worsened the Debtor's present financial difficulties, with the continuing burden threatening the Debtor's ability to maintain operations, employ its workforce, and provide uninterrupted care to its patients.

Chapter 11 Filing and Go-Forward Strategy

These circumstances necessitated Chapter 11 relief to provide the Debtor with breathing room to stabilize operations and maximize value for all creditors. The Debtor filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code on July 16, 2026 (the "Petition Date") in the U.S. Bankruptcy Court for the Eastern District of New York (Case No. 26-43435).

• The Debtor intends to continue operating and managing its businesses as a debtor-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. No request has been made for the appointment of a trustee or an examiner, and no official committee has been appointed by the Office of the United States Trustee.
• The Debtor believes that the protection of the Bankruptcy Code and the automatic stay will allow it to address its debts with the taxing authorities, preserve its patient-care operations, and confirm a plan of reorganization in accordance with the Bankruptcy Code. The purpose of the filing is to preserve the Debtor's assets for the benefit of creditors and maintain the priorities established by applicable law.
• According to the Debtor, the needs and interests of the Debtor and its creditors will be best served by the Debtor remaining in possession of its assets and managing its affairs as a debtor-in-possession until confirmation of a reorganization plan, affording the Debtor a chance to develop a plan of reorganization that has the potential to pay creditors substantially more than they would receive in a liquidation or receivership.
• The Debtor intends to continue in operation and propose a plan of reorganization that treats all creditors in a fair and equitable manner consistent with the provisions of the Bankruptcy Code.