Genesis HealthCare filed for Chapter 11 bankruptcy on Wednesday in the northern district of Texas.
The move will allow Genesis to address its legacy liabilities associated with previously divested operations, the company said.
“Our ongoing work has confirmed that, to maintain our momentum, we must address our legacy debt structure,” said David Harrington, executive chairman of the Genesis HealthCare board of directors. “The goal of this filing is to emerge a stronger, healthier company poised to exceed our goals for clinical and operational excellence.”
The company has secured a commitment of $30 million in debtor-in-possession (DIP) financing from its existing secured lenders, Genesis said. The financing, along with cash on hand and cash flow generated from ongoing operations, will support the business to satisfy its ongoing obligations and enable it to deliver care during the court process.
“Importantly, the filing includes provisions to ensure that staff will retain their positions, pay and benefits so that patients and residents will continue to be served by the providers they trust,” Genesis said. “Vendor agreements will remain in place while the process moves forward.”
WHY THIS MATTERS
The nursing home operator in Kennett Square, Pennsylvania, struggled with legal costs from personal-injury and wrongful-death claims, according to The Wall Street Journal.
The company operated over 500 facilities at its peak in 2016, but began divesting hundreds of the facilities after finding it unprofitable to operate at that scale, the WSJ report said.
Genesis currently operates an estimated 218 facilities across 19 states.
ReGen Healthcare, which is a current company investor, has reportedly entered into a deal to buy Genesis.
THE LARGER TREND
The bankruptcy filing follows months of speculation about Genesis, after the company missed $4.2 million in rent payments to Omega Healthcare Investors this spring, according to McKnight’s Long-Term Care News.
Email the writer: SMorse@himss.org