A group of four successful bidders is set to buy the assets of major Midwest senior care provider Petersen Health Care, for a total price tag of $136 million.
The Peoria, IL-based company and operator of around 100 facilities has been embroiled in legal troubles for much of this year and has been going through Chapter 11 proceedings in the US Bankruptcy Court for the District of Delaware.
An auction for Petersen’s assets ran on July 2 and 3. Three facilities are set to be sold to HP Developers LLC for nearly $15 million, while the bids for two more were won by banks for around $3 million and $2 million, respectively.
The successful bid for the rest of Petersen’s skilled nursing facilities was won by a stalking horse bidder — Petersen Acquisitions LLC — for $116 million, according to court documents.
A stalking horse offer may be prearranged between a company going through bankruptcy and another firm to establish a reasonable floor for bids. A stalking horse bidder is typically offered an incentive for this arrangement, such as a one-time payment to compensate them if they are outbid.
A hearing is scheduled for Wednesday morning, in which US Bankruptcy Judge Thomas Horan will consider any raised objections to the potential sale and potentially give it the court’s final approval.
The pending sale to multiple buyers has been anticipated since late March, when lawyers for Petersen predicted this outcome.
McKnight’s Long-Term Care News’ attempts to contact Petersen for further comment Monday were unsuccessful.
Petersen’s legal woes began in February, when two lenders sued the provider for allegedly failing to make payments on a total of $50 million in loans spread across 17 facilities.
The provider has maintained its commitment to continuing care for its roughly 5,300 residents throughout the legal process — in statements from its lawyers to the court and from a company representative to McKnight’s. To this end, Petersen secured a $45 million bankruptcy loan to cover the cost of operations in mid-May.
