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Bankruptcy filing allows California Palms to remain open

YOUNGSTOWN — The owner of California Palms Addiction Recovery Center on state Route 46 in Austintown says his company’s bankruptcy filing imposes an automatic hold on the agreement he made to close the facility today.

Attorney Sebastian Rucci said the bankruptcy filing Friday was from California Palms LLC, owner of the building the recovery center uses for its operations.

Rucci also filed a notice with Mahoning County Common Pleas Court on Monday to alert Judge John Durkin of the bankruptcy filing, which Rucci said “stays any action” by Durkin in a monthslong legal dispute between California Palms and its lender, Pender Capital.

It means that today’s deadline for Rucci to vacate the property and remove all of the rehab’s patients is no longer valid, Rucci told The Vindicator in an email.

Rucci said the rehab center “is free to operate and we are again accepting new patients.”

Attorney Nancy Valentine of Cleveland, who represents Pender, said she cannot comment on ongoing cases.

California Palms agreed in an Oct. 30 Mahoning Common Pleas Court filing to vacate by today. Rucci, however, told The Vindicator the agreement was not intended to be the end of the facility — but instead was only a way to give him more time to refinance the facility’s debt.

“I was trying to avoid filing Chapter 11, but (Pender) gave us no choice,” Rucci said in an email.

He added that the rehab secured a $5 million loan from Polaris Equity, but Pender was not willing to give California Palms enough time to close on the refinancing, “prompting the filing of the Chapter 11.”

The filing in common pleas court asks Durkin to impose a stay in the case in his court, but a court official agreed that the bankruptcy filing effectively takes the court out of the matter.

Rucci said in an email that his main goal is “serving those who need our help” with substance abuse. He said he invested $5 million in the building and provided more than $2 million in free care to military veterans over the past 34 months.

erunyan@tribtoday.com

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