§ 7214. Avoidance of contracts

(a) The Court may grant a motion filed by the receiver to avoid a lease, mortgage, secured transaction, or other contract entered into by the owner or licensee of the facility if the Court finds that the agreement:

(1) was entered into for a fraudulent purpose or to hinder or delay creditors;

(2) including a rental amount, price, or rate of interest, was unreasonable or excessive at the time the agreement was entered into; or

(3) is unrelated to the operation of the facility.

(b)(1) The receiver shall send notice of the motion to any known owners and mortgage holder of the property, the licensing agency, and the State Long-Term Care Ombudsman at the time of filing.

(2) The Court shall hold a hearing on the receiver's motion to avoid a contract within 15 days.

(c) If the receiver is in possession of real estate or goods subject to a contract or security interest that the receiver is permitted to avoid under this section and if the real estate or goods are necessary for the continued operation of the facility, the Court may set a reasonable rental amount, price, rate of interest, or replacement contract term to be paid by the receiver during the term of the receivership.

(d) Payment by the receiver of the amount determined by the Court to be reasonable is a defense to an action against the receiver for payment or for the possession of the subject goods or real estate by a person who received notice.

(e) Notwithstanding this section, there may not be a foreclosure or eviction during the receivership by any person if the foreclosure or eviction would, in view of the Court, serve to defeat the purpose of the receivership. (Added 2009, No. 36, § 2.)