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News & Publications >> Press & Media >> David Osias and David Zaro Receive Turnaround Management Association's Highest Honor

David Osias and David Zaro Receive Turnaround Management Association's Highest Honor

Attorneys Recognized for Transaction of the Year – Large Turnaround of Sunwest Management

SAN DIEGO – Oct. 19, 2011 – In recognition of their contributions to successfully restructuring Sunwest Management, Inc. one of the largest elderly housing operators in the U.S., David Osias and David Zaro, partners of Allen Matkins Leck Gamble Mallory & Natsis LLP, will receive the Turnaround of the Year Award – Large Company during the 2011 Turnaround Management Association Annual Convention on October 26, 2011.

Osias and Zaro, who were lead counsel for the Federal Receiver in the Sunwest restructuring, were part of the team that consolidated Sunwest’s core properties into a single entity in which investors acquired interests based on prior investments and elections, while lenders retained security interests in special purpose entities.

"This undertaking involved incredible effort by the Chief Restructuring Officer (CRO) and Receiver to overcome investor and lender attitudes which were hardened by false promises and misrepresentations of former management," said Osias. "The success achieved by the CRO and Receiver, with the legal and accounting team, was accomplished through taking comingled revenues and utilizing them to creatively accomplish a global resolution that obtained added value through the legal aggregation of the enterprise."

Osias is the current Managing Partner of Allen Matkins. He is the senior member of the firm's Bankruptcy & Creditors' Rights Department, and is widely recognized as an authority on creditor and debtor rights in out-of-court workouts and restructurings, federal and state-court receiverships, and reorganization and liquidation bankruptcy proceedings.  Osias has represented a broad range of clients with respect to debtor-creditor matters.

Zaro is a partner in the Los Angeles office of Allen Matkins, where his practice focuses upon litigation with an emphasis upon creditors' rights, bankruptcy litigation, and state and federal receiverships. He is recognized for his skill in civil litigation through trial. In addition, Zaro has resolved numerous matters through alternative dispute processes, including mediation and arbitration. Zaro represents a wide range of clients including banks and other institutional lenders, developers, landlords, receivers, examiners, secured and unsecured creditors, and other business enterprises.

Salem, Oregon-based Sunwest Management rose to become the fourth largest elderly housing operator in the U.S. with 290 facilities in 38 states and served more than 18,000 elderly residents in early 2008. It utilized debt financing and investor contributions to acquire and develop senior living facilities. It suffered critical cash-flow problems due to the overleveraging of its properties, low occupancy, disruption in the capital markets and mishandling of cash, which left the company faltering with a total debt of a stunning $2.7 billion and the lives and medical care of thousands of elderly residents at risk.

The Sunwest investment program was challenged by the Securities and Exchange Commission as a Ponzi scheme and confirmed as fraudulent by the Court.  The receivership and bankruptcy cases involved more than 730 separate legal entities, most of which had distinct ownership, and 1,800 investors.

A joint venture led by the Blackstone Group acquired 144 Sunwest senior-living facilities in a $1.35 billion transaction that closed in August 2010. Secured lenders received 100 percent recovery while investors and unsecured creditors recovered 40 percent, with another 20 percent on the way from the transaction, additional estate assets, and recoveries by the Federal Receiver from professionals that advised Sunwest with respect to the investment and loan program.  The SEC has cited the case for its “extraordinary outcome.”

Presentation of the 2011 Turnaround of the Year and Transaction of the Year Awards will take place on October 26, 2011 from 11:45 a.m. – 2 p.m. at the Hilton San Diego Bayfront Hotel.  The Turnaround Management Associations' Annual Convention is the premier meeting for professionals dedicated to turnaround management, corporate restructuring and distressed investing. The Chicago-based Turnaround Management Association has more than 9,000 members in 48 regional chapters worldwide who comprise a professional community of turnaround practitioners, attorneys, accountants, investors, lenders, venture capitalists, appraisers, liquidators, executive recruiters and consultants. Visit turnaround.org for more information.