Genesis HealthCare got confirmation of its plan to sell and exit bankruptcy Wednesday, a near-final moment in a case that threatened to consume the company and captured industry attention for more than 15 months.
U.S. Bankruptcy Judge Stacey Jernigan issued a late confirmation order, after five days of last-minute negotiations, allowing the buyer of 101 W. State Street to assume a direct lease for 22 Pennsylvania nursing homes.
Beginning today, Genesis will operate at 101 W. State Street, which will absorb all of the original company’s employees. Although the exit plan is described as a liquidation sale, the provider’s 175 facilities remain open for business, with those not yet formally transitioned through regulatory channels using interim managers and remaining under Genesis licenses for now, the attorneys said.
Jernigan had yesterday reprimanded participants for not completing the sale sooner, following his signing last Thursday evening. On Wednesday, she entered the courtroom with “happy faces” and listened intently as attorneys for several parties described the case’s wild swings, obstacles in the form of “hills and valleys” and the last-minute horse-trading necessary to maximize the money available to creditors.
Genesis’ lead attorney, Dan Simon, told the court there had been “a lot of sleepless nights” for his team, the restructuring committee, executives, front-line employees and hundreds of Genesis’ unsecured creditors who once needed just $15 million to settle all their debts. The final deal is expected to bring in up to $248 million and allow unsettled lawsuits to continue.
“It’s been a strained relationship. … We had very different views on this deal early on,” Simon said, noting the collaboration that emerged after a second auction determined 101 W. Street was the buyer in a $996 million deal. “We came together to maximize value in every moment. In my opinion, the beauty of bankruptcy is that sometimes your adversaries become your allies, and that’s what happened here.”
Simon also noted that the case has been rife with twists and turns and uncertainty as new issues, known and unknown, continued to emerge, even yesterday. But he and real estate agent Andrew Turnbull have sometimes praised 101 W. State Street for working together.
Turnbull described the company – an offshoot of NewGen, which previously had a joint venture with Genesis – with “difficult negotiations” until the last minute, but also having “moved and weaved with us” to get both sides where they needed to be.
Move forward with momentum
The final agreement calls for the creation of several oversight bodies and names one of the reorganization’s two chief executive officers to oversee business transitions of Genesis’ assets. He will oversee the formal licensing renewal of the remaining facilities, payroll and other employee-related issues through a reverse transition services agreement.
After a final signing this afternoon, money was expected to begin flowing between buying and selling entities, with monitoring continuing for the foreseeable future. The deal excludes former Genesis investor and former bankrupt bidder Joel Landau, whom Jernigan effectively blocked from obtaining the company’s assets when she launched a low bid that was accepted under questionable circumstances in December.
A lawyer noted Wednesday that his decision to reopen the auction “broke the impasse” to allow creditors to recover the true value and made it possible to finalize the deal this week.
Jernigan noted that a 5-person board of directors will oversee the liquidation run by a liquidation company. A final agreement also requires annual updates to the court.
Genesis confirmed the closing in an emailed statement Wednesday afternoon. .
“Affiliated centers and their employees will operate under WSSH ownership following the transaction, with a continued commitment to providing high-quality care to patients and residents,” a spokeswoman wrote. “Center operations continue as usual, with no interruption to patient and resident care.”
The company also posted a message on social media Wednesday afternoon asking its residents, families and teams to stay tuned for “what’s next.”
“For 40 years, we have built a history of caring for people and communities,” shares a patient-centered video. “We are building a new legacy rooted in the same commitment to exceptional care, the same dedication to every detail, the same dedication to quality excellence and the same people who show up every day for the people who count on us.”
Founded in 1985, Pennsylvania-based Genesis grew from nine locations to more than 500 in 34 states in 2015. A 2007 private equity deal with Formation Capital took it private, but it was after merging with another provider in 2015 that it began trading on the New York Stock Exchange.
It became private again in 2021 following a restructuring and investment from Landau-affiliated ReGen Healthcare, and questions about its solvency and quality of care followed soon after. In its bankruptcy filing last July, Genesis cited inherited legal debt as one of its biggest financial challenges.
Three patient ombudsmen have overseen care and operations throughout the case and one on Wednesday praised Genesis’ new management team for keeping staff motivated during the uncertainty of the last year.
“The CNAs, the dietary staff, the housekeeping staff never flinched and people stayed,” said Suzanne Koenig of SAK Healthcare.
Gn bussni
