Six Lenders, DST Agent Object as Inspired Healthcare Auction Opens Without Proceeds Split
Inspired Healthcare Capital’s court-supervised asset auction, run on a sale schedule the debtors have amended 15 times since the case began, is scheduled to proceed Aug. 25, with a sale hearing set for Sept. 15, according to court filings. In the five days before the auction, at least five secured lenders and the agent for a group of Delaware statutory trust investors filed objections raising a common defect in the sale contracts: none of them specify how the purchase price will be divided between the DST entities that hold title to the underlying real estate – where retail investors’ beneficial interests sit – and the “Master Tenant” operating companies that run the facilities day to day.
Separately, the debtors on Aug. 24 subpoenaed a Washington state bank for the personal account records of their own former chief executive officer.
IHC filed for Chapter 11 protection on Feb. 2, listing estimated liabilities of between $1 billion and $10 billion across more than 160 affiliated debtors in the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division, before Judge Mark X. Mullin. The filing followed AltsWire’s July 2025 report that IHC had suspended investor distributions amid a formal U.S. Securities and Exchange Commission investigation and shut down its in-house operator, Volante Senior Living. The court approved $40 million in debtor-in-possession financing and bid procedures in March, setting an initial auction for June 24; that date was later pushed to July 29 as IHC reported strong bidder interest, and has since slipped further – through 15 total amendments – to Aug. 25.
That process has already drawn stalking-horse bids from 10 buyers across 30 communities – including Sonida Acquisition, National Healthcare Properties, and AREP HC Fund III Investments – according to the same Aug. 12 certificate of publication that set the current auction and sale-hearing dates. AltsWire reported in July that the earliest of those bids totaled $341.7 million across 18 communities, a figure that has since grown to at least $697 million as more buyers signed on.
The current wave of objections traces back to an Aug. 18 filing from Pinnacle Bank, the first secured lender to formally object to the sale. Pinnacle – owed more than $55 million across three skilled nursing facility loans personally guaranteed by Luke Lee, who led IHC as chief executive officer before stepping down and remains a current officer and equity holder of the debtors – argued that the debtors’ property-by-property price allocations don’t distinguish between real estate and personal property, a distinction Pinnacle says is essential to a pending lawsuit the Official Committee of Unsecured Creditors has brought against it. Pinnacle separately accused the debtors of “procedural gamesmanship” for imposing a new, unapproved sale-objection deadline on short notice.
Five more lenders and one investor group filed similar, though not identical, objections between Aug. 20 and Aug. 24. HPI Fairmount Lender and HPI Delray Lender, secured by $13.75 million and $26.5 million loans on two debtor communities, told the court the debtors are running a “disjointed sale process” and accused them of violating a contractual right of first refusal on the Delray Beach, Fla., property. Neither the $18.125 million bid from Sonida Acquisition for the Grapevine, Texas community nor the $25.1 million bid from Inspired Florida Acquisitions for Delray Beach allocates proceeds between real and personal property, or between the DST and its Master Tenant, the lenders wrote – adding that the creditors’ committee has already sued to strip HPI’s own liens in adversary proceedings served just days earlier.
UMB Bank, owed roughly $15.46 million on a loan against a facility in Eugene, Ore., that is also personally guaranteed by Lee, pointed to language in the asset purchase agreement letting the parties defer allocating the purchase price among the assets until 60 days after the initial closing. Provident Bank, owed roughly $110 million across four DST-owned communities, and Stride Bank, owed $12 million against a Fort Myers, Fla., facility, raised related objections; Stride’s filing noted that the sale timeline has now been amended 15 times since the case began.
The sharpest version of the objection came from Concorde Investment Services, acting as agent for the retail DST investors behind three communities – in Augusta, Ga.; Fort Myers, Fla.; and Eugene, Ore. – with sale prices of $29 million, $13.2 million, and $32.3 million, respectively. Concorde’s filing asks the court to escrow sale proceeds until the DST/Master Tenant split is resolved, arguing that without it, investors cannot know what they stand to recover. The objection echoes concerns raised by the DST Investor Committee, which AltsWire reported was formally constituted in June to represent the roughly $1.2 billion in capital IHC raised from DST investors – who, as unsecured creditors, sit behind secured lenders and DIP obligations in any recovery.
Separately, Pinnacle has asked the court for emergency Rule 2004 discovery, seeking to depose M. Benjamin Jones, the debtors’ chief restructuring officer, who was engaged through Ankura Consulting Group, and compel production of documents. In an Aug. 18 filing, Pinnacle said the debtors have signaled, “for the third time in two months,” an intent to surcharge lender collateral for back-office and professional fees without ever filing the formal surcharge motion required under the Bankruptcy Code. A hearing on the request is set for Aug. 31.
The renewed scrutiny also extends to Lee personally. Court filings reviewed by AltsWire show Lee – who wrote the July 2025 letter to investment advisers announcing the distribution halt while serving as CEO, and who was later sued by an Emerson Equity-affiliated fund over an alleged $1.5 million loan misrepresentation – personally guarantees the Pinnacle loans and the UMB loan, and is listed in a separate August filing as both a current officer of the debtors and a “Common and Preferred Equity Holder,” notwithstanding his earlier departure from the CEO role. On Aug. 24, the debtors themselves served a subpoena on Heritage Bank in Washington state for account records tied to Lee, a second individual named Patrick Lam, and more than a dozen affiliated entities named “Sukiyaki 1” through “Sukiyaki 14.” The subpoena notice does not explain what is being investigated, and no complaint has been filed describing any allegation against Lee or Lam.
The case’s unresolved SEC investigation also resurfaced this month: a group of 13 DST investors pursuing FINRA arbitration claims against broker-dealers objected to a proposed 90-day extension of IHC’s exclusivity period, arguing that the bankruptcy’s injunction, extended through Nov. 21, is being used to stall their claims. AltsWire has previously reported that Emerson Equity, IHC’s managing broker-dealer and sole underwriter, was ordered to turn over internal documents amid the same SEC probe.
Professional fees in the case total roughly $6.7 million to date; lead debtor counsel McDermott Will & Schulte LLP alone billed $4.23 million in June, according to fee statements filed with the court. IHC’s second bid to extend plan exclusivity, previously set for an Aug. 27 hearing, has been pushed to Oct. 14 – pushing any eventual investor distribution further out than the auction alone would suggest.
Visit the AltsWire directory page.
