Execs: Bankrupt NY dental chain has sold equipment

By CAROLYN THOMPSON | December 12, 2011 | 6:50 PM EST

BUFFALO, N.Y. (AP) — A bankrupt New York-based dental chain that abruptly closed offices in 13 states last year has sold off virtually all of its equipment to pay creditors, executives said at a bankruptcy meeting Monday.

Some equipment remains in a Greensburg, Pa., office because the landlord has denied access to the building, Allcare Dental Management's chief executive officer, David Pennington, and its president, Dr. Robert Bates, said. Patient files have been transferred to other dental practices, except for a box full of charts from one office whose location is unclear, the executives said.

Buffalo-based Allcare Dental Management Inc. and 14 related companies filed for Chapter 7 liquidation last month in U.S. Bankruptcy Court, nearly a year after running out of money. Without warning patients, the company closed more than three dozen offices in New York, Illinois, Iowa, Massachusetts, Michigan, New Hampshire, North Dakota, Nebraska, Ohio, Pennsylvania, Tennessee, West Virginia and Wisconsin.

The closing prompted lawsuits by patients who said they'd prepaid for services they never received, as well as investigations by attorneys general in New Hampshire, Indiana and elsewhere.

The bankruptcy filing listed no assets and $3.6 million in liabilities. Court filings show HSBC Bank is the largest creditor, owed $1.7 million on a secured loan. Velocity Network Inc. of Erie, Pa., which provided Internet services, has a $1.3 million judgment against the business after suing Allcare in Erie County, Pa., in January for unpaid services.

Smaller creditors include several former landlords.

Neither Pennington nor Bates would comment following Monday's initial creditors hearing, during which they explained how Allcare operated but not how it failed.

Bates said that as president and the only shareholder of each Allcare office, he trained the dentists on denture fabrication, covered for them on days off and for several years after the company was incorporated in 2001 worked six days a week in the clinics.

Pennington ran the parent company, Allcare Dental Management Inc., which owned another entity, Allcare Dental Management LLC that provided advertising and staffing for the various locations, arranged leases and purchased equipment. The branch offices paid management fees to Allcare LLC, which were derived from patient fees, Pennington said.

The executives acknowledged that patients sometimes paid in advance for work. At the time of the closing, Allcare said it couldn't tell patients of the closing because its phone and computer service had been shut down. A notice to the New Hampshire Board of Dental Examiners at the time said "the entire company has run out of money, thus rendering it unable to open for business as usual effective Monday."

In a website posting for consumers, the company said its plans to address financial problems by closing underperforming offices while raising capital from an equity group had fallen through, and that attempts to obtain bridge financing also had failed.