Petersen Health Care can borrow $45 million while in Chapter 11 bankruptcy to maintain operations at its nursing homes and make the properties more appealing to potential buyers, a federal bankruptcy judge ruled Tuesday.
The good news for the troubled provider came a day after a separate hearing resolved issues with creditors connected to some of its 19 facilities in receivership. Both decisions were made by Judge Thomas Horan of the US Bankruptcy Court for the District of Delaware.
The back-to-back rulings allow the Midwestern provider to advance its plans to restructure and sell off some of its holdings.
The operator of nearly 100 rural facilities has been embroiled in multiple legal battles this year over around $50 million in allegedly missed loan payments tied to 17 nursing homes in Illinois, Iowa and Missouri. The company’s total debts had reached around $300 million by the end of April.
Petersen requested the $45 million in order to preserve and potentially increase the value of the facilities it hopes to sell later this summer to stabilize its finances.
The court ruled Tuesday that “the relief requested in the motion is necessary, essential and appropriate, and is in the best interest of and will benefit the debtors, their creditors and their estates.”
Horan clarified that Petersen would use the funds to pay employee wages, continue partnerships with its vendors and maintain care quality for its residents.
Representatives for Petersen and its legal team did not respond to McKnight’s Long-Term Care News’ requests for comment by publication time.
One major creditor had been holding up the bankruptcy sale in recent weeks — arguing that Petersen could not be trusted to handle the process well given its debt and the facilities placed in receivership.
Horan, however, urged the provider and its lender to resolve the issue so that the sale could move forward. The newly approved loans are seen as a significant step forward in that process.
