Long-term care operator Petersen Health Care said it lis likely to sell off blocks of its facilities as part of its efforts to restructure and pay its debts after filing for Chapter 11 bankruptcy last week. The plan was confirmed Friday in statements by Petersen lawyer Dan McGuire to the US Bankruptcy Court for the District of Delaware.
Petersen currently operates nearly 100 senior care facilities in the rural Midwest but is nearly $300 million in debt. That includes tens of millions of dollars owed in loans that resulted in eight Petersen-run facilities in Illinois being placed in receivership.
The Peoria, IL-based provider was able to secure a $45 million bankruptcy loan and hopes to maintain operations, partially in order to keep up the value of its facilities and generate more revenue upon a sale.
“It isn’t blunt and up front in the pleadings, but let me be blunt and up front now — this is a sale case,” McGuire told the bankruptcy court Friday. “I don’t think it’ll be one buyer. I think the homes will be sold in chunks to a bunch of different buyers who can recapitalize them and continue on with the care level that our residents need.”
McGuire further emphasized that Petersen hopes to keep its facilities running so that its more than 5,300 residents can continue to receive uninterrupted quality care.
Speculation of Petersen’s eventual bankruptcy began in earnest following a Feb 16. Bloomberg report that the company was preparing to file.
Company representatives told McKnight’s Long-Term Care News in February that the company planned to continue operating and providing care — a stance that was reconfirmed following the bankruptcy filing last week.
“Petersen will operate as usual, and our team remains committed to continuing to provide first-rate care for our residents,” said David Campbell, chief restructuring officer at Petersen in a statement provided to McKnight’s. “We will emerge from restructuring as a stronger company with a more flexible capital structure. This will enable us to continue as a first-choice care provider and a reliable employer for our staff.”
McKnight’s attempts to contact Petersen for further comment Monday were unsuccessful.
The company’s financial struggles echo familiar struggles for rural providers — high inflation, low reimbursement rates and staffing struggles. Petersen also fell victim to multiple cyberattacks since October, resulting in billing delays and difficulties accessing vital business records.
Servers, email addresses and software all had to be replaced due to the ransomware attack, Reuters reported. A subsequent cyberattack on one of its major payers, UnitedHealth Group’s Change Healthcare, only worsened Petersen’s economic conditions.
