NEW YORK — The legal troubles for embattled Addiction Recovery Care are continuing to mount, as a hearing will be held this week to determine whether the company should be held in contempt for violating a preliminary injunction.
At the same time, the company’s attorneys have filed a motion asking that they be allowed to withdraw from the case.
ARC, its owners and subsidiaries are being sued by Angelica Capital Trust for defaulting on a loan.
In November, Angelica paid ARC $5.4 million for $8.1 million in anticipated tax receivables, with the understanding the company would turn over the refunds once they arrived. Instead, when ARC received the refunds in December, the company kept and began spending the money.
Angelica claims ARC is trying to scrape together $27.7 million to settle a Department of Justice investigation into Medicaid and Medicare fraud.
On Jan. 13, in an order setting a hearing for a preliminary injunction, U.S. District Judge George Daniels also issued a temporary restraining order prohibiting ARC from transferring any money from its account that would cause it to have less than $10 million. Instead, Angelica claims ARC immediately began transferring money from its account to those of its subsidiaries.
Last week, Judge Daniels agreed to issue a preliminary injunction, instructing ARC to move $4.7 million of its remaining money into a separate, frozen bank account, prohibiting the company from transferring any money out of it. That left ARC $1 million for payment of business expenses, which was expected to last the company until Feb. 4.
On Monday, he also ordered the company to appear in court to show cause for why “an order for civil contempt, sanctions and other remedies should not be issued.” The order also lists other actions the judge could order, including requirements to prohibit ARC from transferring any assets or entities or make any payments, to deposit any funds the company holds into a bank account with the U.S. District Court Clerk’s Office, to produce all bank records from December and January to Angelica, to pay Angelica’s legal fees for costs in connection with the contempt motion, and for ARC owners Tim and Lelia Robinson and general counsel Jessica Burke to appear in New York for depositions.
But that same day, the attorneys representing ARC in the proceeding, Eddy Salcedo and Torrey Kaufman Young, filed a motion asking that they be allowed to withdraw from the case. The motion does not give a reason for the request, but a separate declaration filed by Young does give some detail.
“Following the hearing that took place on January 21, 2026, my colleague, Mr. Salcedo, and I became aware that our clients were insistent upon taking actions with which we have a fundamental disagreement,” Young wrote in her filing. “In addition, the clients failed to cooperate in the representation and rendered the representation unreasonably difficult of Mr. Salcedo and me to carry out our employment effectively.”
However, Angelica’s attorneys are objecting to the request to withdraw, saying it would delay Thursday’s contempt hearing.
“Respondents’ repeated contempt of this court’s orders is causing the dissipation of Angelica’s property at a rapid rate, and time [is] of the essence in addressing any further harm that may result from respondents’ ongoing violations of the preliminary injunction (which Ms. Young’s statement, supra, and respondents’ past misconduct strongly suggest are likely to continue),” Angelica attorney Anthony M. Candido wrote in his objection.
Judge Daniels has not yet ruled on the motion by ARC’s attorneys to withdraw.
Copies of court documents relevant to this story are attached below. Additional information and documents about the case can be found at https://mountain-topmedia.com/creditor-seeks-to-freeze-addiction-recovery-cares-finances/ and https://mountain-topmedia.com/judge-orders-freeze-of-nearly-all-arc-assets/.
