Fountain View Inc. filed for Chapter 11 bankruptcy last week, a move that will allow the troubled nursing-home operator to continue operating despite a mountain of debt and a lien placed on its bank accounts.

The Burbank-based company which earlier this year defaulted on more than $200 million in debt has received Bankruptcy Court approval to use its cash to pay salaries, benefits and certain other expenses.

“Because we have sufficient cash on hand and the court’s decision, we are able to continue business as usual at all our facilities,” Chief Executive Robert Snukal said through a spokesman.

The lien was placed by lawyers for the family of a woman who died after a stay in one of Fountain View’s facilities.

As the Business Journal reported last month, the family of Margaret Muccianti was awarded $6.1 million earlier this year in the case against Fountain View. The company warned in August that it could seek bankruptcy protection if it didn’t work out a standstill with plaintiffs’ lawyers while appealing the case.

Fountain View’s insurance carrier refused to post appeal bond, and the company said it couldn’t afford to do so itself.

Stephen Garcia, a lawyer for the Muccianti family, declined to discuss the status of negotiations. However, he said the company is “abusing” the bankruptcy process in order to keep payments flowing to various Snukal family members in the form of salaries, rents on family-owned properties and purchases from a medical-supply company partially owned by Snukal’s wife, Sheila. Sheila Snukal is also Fountain View’s chief operating officer.

“We won’t even dignify that (accusation),” said Roger Gillott, an outside spokesman for Fountain View.

According to documents filed with the Securities and Exchange Commission, Robert and Sheila Snukal took in more than $750,000 in salary in 2000. A son-in-law, Keith Abrahams, drew another $200,000. In addition, the company paid $1.86 million to the Snukals in lease payments, and purchased $6 million of medical supplies from the company owned one-third by Sheila Snukal.

In 2000, Fountain View had revenue of $302 million and a loss of $1.8 million.

“It is our view that the Bankruptcy Court will be able to discern fact from fiction,” Garcia said. “The company declared $81 million in net worth in March of this year, and we think they still have that net worth.”