Bay Area senior care companies that lost wage ruling file for bankruptcy

San Jose Mercury News (CA)

Sep. 29--CONCORD -- The operators of several senior care residential sites in the Bay Area has filed for bankruptcy following a pair of adverse rulings that required the companies to pay millions of dollars in unpaid wages to several employees.

Welcome Home Senior Residences, Cardinal Care Management, and S&S Investments, which are all headed by residential care executive Steve Chou, have filed for a Chapter 11 bankruptcy, which will allow the companies to reorganize their finances.

The bankruptcy cases were filed in the wake of unfavorable state government and state appellate court rulings that effectively forced Chou and the debt-burdened companies to pay $2.5 million in back pay to several workers who had sued for unpaid wages.

A state Appellate Court ruling against Chou and his companies was issued on April 20, a decision that bolstered a state labor hearing officer's order that forced the companies to pay seven workers the $2.5 million, along with various penalties.

"Chou submitted a declaration stating that he, Cardinal Care, and Welcome Home lacked the financial ability to pay the awards or to deposit the amount of the awards with the court," according to the state appellate court's ruling.

The state labor commissioner's office determined that the residential care companies owed overtime wages, liquidated damages, interest, and waiting time penalties to seven employees.

"The combined amount of the seven awards was more than $2.5 million," the state Appellate Court determined. "Cardinal Care and Welcome Home were found liable for all of this amount. With Chou individually liable for all or a portion of each of the awards, his liability came to more than $2.2 million."

The seven workers were live-in caregivers or relief caregivers, according to court papers.

Chou and his companies told the labor commissioner and the state court that they couldn't pay the workers.

"Chou submitted a declaration stating that he, Cardinal Care, and Welcome Home lacked the financial ability to pay the awards," the court documents show.

Welcome Home's web site includes a brochure that states the company operates eight residences for the elderly. The sites all appear to be single-family homes.

The elderly care homes consist of three locations in Alamo, two in Concord, and one each in Dublin, Pleasanton, and Walnut Creek, the brochure indicates.

"Welcome Home Senior Residences were created to provide a warm and comfortable living situation where every senior resident feels like they are living in their own home while receiving 24-hour attention and care," the company's brochure states.

This news organization contacted Chou's office to request a comment. A Chou assistant stated the request was forwarded to Chou.

Each of the three companies controls assets with a value of no more than $50,000, papers on file with the U.S. Bankruptcy Court in Oakland show. They all listed debts of at least $1 million and no more than $10 million, according to bankruptcy records.

The state appellate court ruling shows that Chou had transferred ownership of four of the residential care properties, as well as a fifth property that he owns, into trusts and limited liability companies whose sole manager was Chou's wife.

Chou declared in court papers that all five residences were burdened by mortgages and that the transfers were undertaken for the purpose of "estate planning."

The seven workers who had sued for the back wages also claimed that the residences whose ownerships were transferred had a combined value that topped $6 million, according to the state appeals court ruling.

Chou said in court papers that he isn't able to pay the workers.

"The unpaid wages award ruling," Chou told the state appellate court, "would bring financial ruin to himself, Welcome Home, and Cardinal Care, and could accordingly disrupt services to the elderly residents of the senior care facilities."

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