NEW YORK, Oct 8 (Reuters) - A U.S. bankruptcy judge on

Wednesday agreed to stop wrongful death lawsuits from proceeding

against Genesis Healthcare ( GENNQ ) employees, shareholders and staffing

agencies, saying the litigation could derail efforts to sell

Genesis nursing homes.

U.S. Bankruptcy Judge Stacey Jernigan granted Genesis'

motion at a court hearing in Dallas, Texas, overruling 14

objections from people who have filed personal injury or

wrongful death lawsuits against the company.

Jernigan put the cases on hold until the end of Genesis'

bankruptcy, finding that the expense of continued litigation

could force the company into a full shutdown and put 15,000

patients and residents at risk.

"We're not going to burn the house down," Jernigan said.

Lawyers for the tort plaintiffs argued that they should be

allowed to sue doctors who had committed malpractice and bring

claims against investors and shareholders who contributed to

Genesis' collapse.

Dan Simon, representing Genesis, said that an "onslaught of

litigation" would imperil the company's ability to provide care,

potentially cause an exodus of critical employees, and reduce

the limited amount of money available to pay tort victims and

other creditors.

Genesis, which operates 175 skilled nursing facilities and

assisted living facilities in 18 U.S. states, filed for

bankruptcy on July 9 with over $2.3 billion in debt.

The company faces over 200 lawsuits alleging malpractice,

wrongful death or other injury, and it was spending $8 million a

month to litigate and settle those cases before it filed for

bankruptcy, according to court filings.

The case has drawn the attention of U.S. senators including

Massachusetts Democrat Elizabeth Warren, who raised concerns

about private equity ownership of healthcare businesses.

Genesis was bought by private equity firms JER Partners and

Formation Capital in 2007, and those owners added to the

company's debt through a series of acquisitions while selling

off the company's real estate. Private equity firm ReGen

Healthcare bought most of the company's equity in 2021.

Warren sent a letter to the company's leaders on Tuesday night,

asking them for clarity about the company's current ownership

and expressing concern that insiders accused of driving the

company into bankruptcy could re-acquire it without paying the

company's creditors, including the wrongful death plaintiffs.

Other private equity-backed health companies that have filed for

bankruptcy in recent months include hospital chains Steward

Health and Prospect Medical Group. Both of those companies, like

Genesis, took on large amounts of debt during private equity

buyouts, sold their real estate, and eventually collapsed into

bankruptcy.

The case is Genesis Healthcare Inc ( GENNQ ), U.S. District Court for

the Northern District of Texas, No. 25-80185

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