North Carolina Administrative Code › Title 11 - INSURANCE › Chapter 11 - FINANCIAL EVALUATION DIVISION › Subchapter H - CONTINUING CARE FACILITIES › Section 11H .0111 - INSOLVENCY OR HAZARDOUS FINANCIAL CONDITION

Current through Register Vol. 39, No. 2, July 15, 2024
(a) A
				negative fund balance is a financial position of a provider or facility in
				which the assets of a provider or facility do not exceed its liabilities, as
				required under generally accepted accounting principles. The Commissioner may
				deem a provider or facility that has a negative fund balance to be insolvent or
				in imminent danger of becoming insolvent if any of the following hazardous
				financial condition standards or factors are applicable or present:
(1) There are findings or conditions reported
				in the provider's or facility's financial statements that the Commissioner
				determines to be adverse to the financial stability of the provider or
				facility.
(2) The current or
				projected ratios of total assets, including required reserve levels, to total
				liabilities indicate an impairment or a deterioration of the provider's or
				facility's operations or equity; or demonstrate a trend that could lead to an
				impairment or a deterioration of the provider's or facility's operations,
				working capital, or equity.
(3) The
				current or projected ratios of current assets to current liabilities indicate
				an impairment or a deterioration of the provider's or facility's operations,
				working capital, or equity; or demonstrate a trend that could lead to an
				impairment or a deterioration of the provider's or facility's operations,
				working capital, or equity.
(4) The
				provider or facility is unable to perform normal daily activities and meet its
				obligations as they become due, considering the provider's or facility's
				current or projected cash flow and liquidity position.
(5) The provider's or facility's operating
				losses for the past year or projected operating losses are of such magnitude as
				to jeopardize normal daily activities or continued provider or facility
				operations.
(6) The insolvency of
				an affiliated provider or facility or other affiliated person results in legal
				liability of the provider or facility for payments and expenses of such
				magnitude as to jeopardize the provider's or facility's ability to meet its
				obligations as they become due, without substantial disposition of assets
				outside the ordinary course of business, any restructuring of debt, or
				externally forced revisions of its operations.
(7) The provider or facility has receivables
				that are more than 90 days old.
(8)
				The insolvency is not temporary and the provider or facility cannot demonstrate
				that the insolvency is materially reduced or eliminated.
(9) There is an adverse effect on the
				provider or facility of reporting entrance fees as deferred revenues, with
				consideration given to all reporting requirements required under generally
				accepted accounting principles and the ultimate net income component of those
				revenues.
(10) A start-up provider
				or facility or any operational provider or facility undergoing plant expansion
				or refinancing of its debt has a financial condition as a result of such action
				that could otherwise seriously jeopardize present or future
				operations.