Kennett Square, Pa.-based Genesis HealthCare has filed for Chapter 11 protection July 9 in a Texas federal court in a bid to restructure its finances and address what the company called “legacy liabilities associated with previously divested operations.”
The bankruptcy filing includes a stalking horse bid from current Genesis affiliate ReGen Healthcare, Bloomberg reported. Genesis said in a news release announcing the filing that the proposed deal is subject to higher bidding and court approval, and would result in ReGen acquiring the company’s operations.
In filing its case, Genesis said it has roughly $708.5 million in secured liabilities and more than $1.5 billion in unsecured debt, according to Bloomberg.
Genesis said in the release that it has secured a commitment of $30 million in debtor-in-possession financing from its existing secured lenders, which, combined with cash on hand and cash flow generated from ongoing operations, “will support the business to satisfy its ongoing obligations, and enable the company to remain focused on delivering quality care during the court-supervised process.”
Genesis, which operates about 175 nursing facilities in 18 states and employs more than 27,000 workers, also said in the release that it will ensure staff will retain their positions, pay and benefits during the bankruptcy process. Vendor agreements will also remain in place during the restructuring.
“We have much to be proud of for the tremendous progress we have made as an organization over the last several years as we have implemented a forward-looking, enterprisewide shift from centralized to market-based operations,” David Harrington, executive chairman of the Genesis board of directors, said in the news release. “Our ongoing work has confirmed that, to maintain our momentum, we must address our legacy debt structure. The goal of this filing is to emerge a stronger, healthier company poised to exceed our goals for clinical and operational excellence.”
