LANCASTER, Pa. — Court documents in the investigation into Pennsylvania-based Retreat Behavioral Heath (RBH) suggest a misuse of funds and totals at least $28 million in unpaid debt.
The addiction treatment center first came under fire in June after the death of two top executives, which led to the company abruptly closing its doors in Pennsylvania, Florida and Connecticut and firing hundreds of employees. This came after prolonged financial struggles and delayed paychecks to employees. Now, the company is being sued for unpaid debts.
James Young, the receiver for RBH, pointed to potential misuse of funds by the company and overvalued assets, a combination which he says the company may not recover from.
"There is no reasonable scenario under which current ownership of [the company] would reopen the facilities," Young said in the documents.
Receivers can be appointed by the court or government to oversee the assets and affairs of individuals or companies in an effort to pay off debts.
For Retreat, these debts include multiple credit defaults, $1.2 million in unpaid wages for the month of June and costs from healthcare violation investigations, which Young says are still incomplete.
During his investigation into the company's finances, Young found that some Retreat Pennsylvania employees received bonuses, which he said, "had potentially been tied to referrals of patients discharged from RBH to selected sober living facilities."
Young did not disclose the names of the employees or the facilities.
The mysterious payments continued as Young also found evidence of large sums of money totaling approximately $7.8 million being wired to entities controlled by David Silberstein of New York. Silberstein is a partner and 33% owner of RBH's Pennsylvania facilities. These payments exceeded rent and management fees for the company and date back to May 2021. This, while the company was defaulting on loans and struggling to pay its employees.
After an asset assessment, Young valued the company at $53.2 million, as of June 30. But after deducting the amounts still owed to patients and staff, the valuation stands at less than 1/7 of the original total, leaving RBH with approximately $7.5 million in assets to pay off its debts.
Young concluded that based on these numbers, the only two options for the company moving forward is to, "Solicit an operator who would be willing to buy the properties outright and has the interest and resources to close a deal and commit working capital to restart these programs," for which Young already has four interested parties, or, "shutter the properties completely and wind down in full."
Young delivered this 200 page document ahead of a hearing set to take place Wednesday, Aug. 15, but due to the length of the investigation, the hearing has been extended to Aug. 27.
But the battle isn't over yet. RBH still has to liquidate its assets and pay off its remaining debts. Young is urging the court to extend his receivership to oversee these operations, saying that without an extension, he believes the money would fall into the wrong hands again.