The sale of Petersen Health Care's properties is set to move forward following a deal with one of its lenders, X-Caliber Funding LLC, allowing a court-appointed receiver to maintain operations of the nursing home giant's eight Illinois facilities.
Background and Bankruptcy Filing
Petersen Health Care, among the largest nursing home operators in the nation, filed for bankruptcy in March, leading to uncertainty regarding the fate of its properties. The sale of these properties faced delays due to a dispute with X-Caliber over the bankruptcy filing for the eight Illinois facilities managed by court-appointed receiver Michael Flanagan, an attorney specializing in long-term care.
Agreement Reached
After reaching an agreement, Petersen and X-Caliber will proceed with a plan established in January, wherein Flanagan will oversee the eight facilities. If the properties are not sold by July 15, their ownership would revert to Flanagan.
Importance of Operational Continuity
Petersen's attorney, Daniel McGuire, emphasized the value of maintaining operational continuity during the sale process, stating that operational facilities have more excellent value than empty real estate. McGuire highlighted the importance of benefiting residents and ensuring repayment to creditors.
Sale Process and Potential Bidders
Despite delays caused by a data breach, Petersen received 20 bids for its properties as of May 1. Bidders included parties interested in acquiring individual facilities and groups interested in purchasing multiple properties. McGuire estimated the potential sale value of Petersen's 90 facilities across the Midwest to be around $300 million.
Petersen Company Overview and Financial Status
Petersen operates facilities across Missouri, Iowa, and Illinois, employing nearly 4,000 staff and accommodating 6,796 residents. With revenue exceeding $339.7 million in 2023, Petersen's financial struggles stemmed from various factors, including slow post-pandemic recovery, inflation pressures, high operational costs, and staffing challenges.
Chapter 11 Bankruptcy Filing and Debt
Petersen filed for Chapter 11 bankruptcy with over $295 million in debt, including obligations to multiple creditors, notably X-Caliber. Approximately $45 million of Petersen's debt is under healthcare facility loans insured by the Department of Housing and Urban Development (HUD).
Brokerage and Attempts to Reach Petersen
Walker & Dunlop Investment Sales has been enlisted to facilitate the sale of Petersen's properties. Skilled Nursing News sought comment from Petersen regarding these developments, but no response was received at publication.
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