<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>green8k70101.txt
<TEXT>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549





                                    FORM 8-K


                                 CURRENT REPORT


                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934





         Date of Report (Date of earliest event reported): July 1, 2001



                             Greenbriar Corporation
                         ------------------------------
             (Exact name of registrant as specified in its charter)



         Nevada                      0-8187                    75-2399477
------------------------    ------------------------    ------------------------
(State of incorporation)     (Commission File No.)        (IRS Employer
                                                           Identification No.)

              14185 Dallas Parkway, Suite 650, Dallas, Texas 75240
          ------------------------------------------------------------
           (Address of principal execute offices, including zip code)


                                 (972) 407-8400
                              --------------------
              (Registrant's telephone number, including area code)


<PAGE>

Item 5.  Other Events.
---------------------

         On August 1, 2001,  Registrant entered into agreements with LSOF Pooled
Equity,  L.P.  to settle and  resolve  litigation  over the amount and nature of
LSOF's  ownership of Registrant.  The dispute had centered  around the number of
shares of  Registrant's  common  stock and  extent of  control to which LSOF was
entitled upon  conversion  of its Series F and G Preferred  Stock and the amount
then due under a "Make Whole Agreement."  LSOF's position would have resulted in
a change of voting control of Registrant to LSOF, which  Registrant  resisted in
the litigation between the parties.

         Under the terms of the  settlement,  Registrant  will repurchase all of
LSOF's  ownership  interests in Registrant,  and LSOF will release all claims in
exchange  for  $4,000,000  in cash  and the  conveyance  of 11  assisted  living
properties  out of the 24 owned  and  operated  by  Registrant,  subject  to any
indebtedness  thereon.  Registrant  will  then  release  LSOF  from all  claims.
Registrant  previously borrowed $12,000,000 from Vestin Mortgage to enable it to
acquire two of the properties to be conveyed to LSOF.  Closing of the settlement
is  expected  to occur by the end of the third  quarter  and will be  subject to
receiving all required third party consents and approvals.

         With the litigation  concluded,  Registrant  will devote its efforts to
rebuilding  its business by exploring  attractive  acquisitions  in the assisted
living industry and in the general real estate market.  Registrant  existed from
1981 to 1989 as a real estate investment trust.  After a change in management in
1989, Registrant changed its primary focus to supplying products and services to
the elderly,  although it continued its business of investing in commercial real
estate.  Beginning in 1994,  Registrant  began  liquidating  its commercial real
estate and devoting its efforts to the assisted  living  sector of the eldercare
industry.  Between  1995 and 1997,  Registrant  opened  several  residences  and
acquired four assisted living companies.  Registrant's assisted living business,
similar to the rest of the  industry,  has  incurred  ongoing  financial  losses
resulting from vacancies,  high turnover,  regulatory  impediments and a general
state of  over-building.  Registrant  believes the long term  prospects  for the
assisted  living  industry  are  fundamentally  sound and will  continue to seek
attractive  acquisition  candidates.  However,  Registrant  will  also  seek  to
diversify its business by returning to its previously  profitable  operations in
general real estate development and investments.

         On July 1, 2001,  Registrant  exchanged all  outstanding  shares of its
Series D Preferred  Stock having an issue price of  $3,375,000 in exchange for a
promissory note in the same principal amount, payable in two years plus interest
at the rate of 10%. All such shares were owned by Sylvia M. Gilley,  the wife of
James R. Gilley, Chief Executive Officer.



                                 Page 2 of 200
<PAGE>


Item 7.  Financial Interest and Exhibits.
----------------------------------------


(c)      Exhibits
         --------

         4.1.8.       Certificate  of Voting Powers,  Designations,  Preferences
                      and Rights of Registrant's  Series H Preferred Stock dated
                      July 12, 2001.

         10.23.1.     Series H Convertible Preferred Stock Purchase Agreement.

         10.23.2.     Pledge Agreement.

         10.23.3.     Promissory Note to Vestin Mortgage.

         10.23.4.     Mortgage on La Villa, Roswell, New Mexico.

         10.23.5.     Deed of Trust on Camelot Assisted Living.

         10.24.1.     Master Settlement  Agreement dated July 31, 2001 with LSOF
                      Pooled Equity, L.P.

         10.24.2.     Consent Agreement dated July 31, 2001.

         10.25.1      Promissory  Note dated July 1, 2001 to Sylvia M. Gilley in
                      the principal amount of $3,375000.


                                   SIGNATURES
                                   ----------

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.

August 1, 2001

                                   GREENBRIAR CORPORATION




                                   By:   /s/ Gene S. Bertcher
                                      ------------------------------------------
                                      Gene S. Bertcher, Executive Vice President





                                 Page 3 of 200

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