Petersen Healthcare — operator of nearly 100 rural Midwest long-term care facilities — hit a snag last week in its plans to restructure and sell struggling facilities as part of a Chapter 11 bankruptcy.
A major creditor is disputing the sale of several facilities in a new filing with the Bankruptcy Court of Delaware.
X-Caliber Funding, which claims to be owed nearly $32 million by Petersen, asked the court to stop Petersen’s sale of eight facilities currently in receivership. Alternatively, the creditor asked that the receiver — attorney Michael Flanagan — be assigned to oversee the Chapter 11 proceedings, according to reporting from WCBU.
The lender claimed Petersen had badly mismanaged these properties and couldn’t be trusted to manage the current process as a result. They alleged the receiver found millions of dollars in unpaid vendor fees, broken equipment and ongoing abuse investigations at one of the facilities.
Petersen responded to the motion — arguing the allegations were unfounded and not relevant to the process of the bankruptcy or the potential sale.
Petersen did not respond to McKnight’s requests for comment Friday.
Since X-Caliber filed a lawsuit against the Peoria, IL-based provider in January, Peterson has maintained that its financial woes are due to a series of all-too familiar complications in the skilled nursing sector. It claims its nearly $300 million in debt ballooned thanks to rising costs, stagnant government funding, staffing shortages as well as multiple cyberattacks that delayed billing, caused record-keeping difficulties and incurred expensive technology costs.
Thomas Horan, bankruptcy judge at the Delaware court, urged the provider Tuesday to resolve the dispute with its creditor. Lawyers representing other Petersen creditors called the roadblock to the sale “a waste.”
Horan asked Petersen and X-Caliber to resolve the issue before mid-May, when further hearings on the dispute are currently scheduled to take place.
