Nursing home system faces foreclosure amid $51M in unpaid debt

A Peoria, Ill.-based nursing home and assisted living company has entered foreclosure proceedings after lenders alleged it owes $51 million in unpaid debts, the Peoria Journal Star reported Feb. 5.

Petersen Health Care, which owns 17 facilities, entered the foreclosure agreement with X-Caliber Funding and Capital Funding in two separate federal cases in January. 

Petersen alleges it was the victim of a ransomware attack in fall 2023 that took down its billing system at several facilities and "crippled" its finances. Both X-Caliber and Capital said they were not made aware of the situation until December.

The first complaint, filed Jan. 23 by X-Caliber Funding, alleges Petersen defaulted on $31.2 million worth of loans on Dec. 29. The case involved eight Petersen facilities. The lawsuit said X-Caliber reviewed the nursing home system's books and it appeared the defendant actually diverted cash from its facilities to float operations at other facilities under common ownership and claimed inability to pay for current expenses. The lender claimed Petersen's lack of liquidity and use of money transfers put resident health and safety at risk. 

In a statement to the Journal Star, Petersen Health Care said the lender "took a very aggressive action and placed facilities in El Paso, Flanagan, Kewanee, Knoxville, Monmouth, Galesburg and Polo into receivership." Petersen said it still owns those properties and is working to minimize the impact on staff and residents.

The second complaint, filed Jan. 31 by Capital Funding, alleges Petersen failed to pay more than $19 million in loans related to nine facilities. A court filing said Petersen lost its insurance in December after failing to make payments and has been unable to find a replacement, which has prevented it from filing for bankruptcy.

"Inadequate state and federal funding and staffing issues continue to put pressure on healthcare providers and were significant factors leading to the current situation," a Petersen spokesperson told the Journal Star. "We are working actively with our lenders and aim to find a solution to return these facilities to our management."

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars