The New York State Attorney General (the ”AG”) recently issued new standards of review for the sale of all or substantially all assets of not-for-profit nursing homes which should be of keen interest to both not-for-profit providers and prospective for-profit purchasers.  See http://www.charitiesnys.com/pdfs/NursingHomeSales.pdf (the “Guidance”). After noting the significant increase in efforts to sell nonprofit nursing homes to for-profit entities since 2014 in New York, the Guidance expresses “significant concern”  regarding the “effort and success” by not-for-profit Boards of Directors and their advisors in evaluating whether the terms of the sale or transfer, and the intended use of the proceeds of the sale, will “promote the mission and purposes “ of the charity.  The Guidance recommends “best practices” for nursing home Boards and their advisors in considering a sale to assist them in the exercise of their fiduciary duties to charitable beneficiaries, including nursing home residents.

It also sets forth specific new factual representations that the AG will require to be made by the seller seeking approval of the sale of all or substantially all nursing home assets. Not-for-profit providers in New York State and any entity interested in a transfer of the assets of such providers are well advised to seek legal, financial and other professional assistance to prepare for the due diligence now required by the Guidance.