Senior Care Centers, a company that runs more than 100 nursing homes and senior living centers in Texas and Louisiana, including in the Austin area, filed for bankruptcy on Tuesday in the U.S. Bankruptcy Court for the Northern District of Texas.
Thirteen assisted living and nursing centers in the greater Austin area are run by the bankrupt company, including Heatherwilde Assisted Living of Pflugerville, Riverside Nursing and Rehab Center, Senior Care of West Oaks, and Brodie Ranch Nursing and Rehab Center, according to the company website.
In a press release explaining the decision, Senior Care Centers LLC said it had faced financial challenges stemming from “significant cuts in reimbursements from government agencies and private insurers while facing ballooning rent payments.”
Senior Care Centers does not own any of its facilities but instead leases them from real estate investment companies. Chapter 11 bankruptcy allows the company to use provisions of U.S. bankruptcy law to renegotiate or get out of leases.
‘The Company’s approximately 11,000 employees will continue to be paid without interruption’
It also potentially boosts the company’s ability to recruit new executives and patients: In court filings Tuesday, Senior Care disclosed that it had struggled to recruit and retain current and prospective employees and patients in recent months after landlords publicly disclosed that it had defaulted on leases and issued termination notices.
As part of the restructuring, at least a third of the properties managed by Senior Care will be sold. On Dec. 5, the day after the bankruptcy filing, Sabra Health Care REIT, which owns 36 nursing facilities and two senior housing communities operated by Senior Care, entered into a $385 million agreement with an an undisclosed buyer to sell all of these facilities.
Chief Restructuring Officer Kevin O’Halloran wrote in a court filing that Senior Care owed Sabra approximately $31.78 million in unpaid rend, maintenance charges, and taxes. Senior Care’s total liabilities as of October 30, 2018 were approximately $268 million, he added.
Commenting on the bankruptcy, Rick Matros, CEO of Sabra Health Care REIT, said, “We are pleased with the progress we have made on our planned disposition [sale] of the Senior Care Centers Facilities. …We determined it was in our best interest to forego a potential earn-out opportunity that may or may not be realized at some future date and instead receive more cash up front. We do not expect Senior Care Centers’ bankruptcy filing to have a substantive impact on our disposition [sale] of the Senior Care Centers Facilities.”
The undisclosed buyer of the 38 facilities sold by Sabra Health has “agreed to reduce the base rent,” according to a court filing by Senior Care Centers, which stressed that it hopes the restructuring will allow it to sustain care for all of its roughly 10,000 patients and residents and continue to pay all 11,000 employees.
Photo: Residents at Heatherwilde Assisted Living in Plugerville, Nov. 2018 (via Facebook)