An under-the-radar company bid $1B to purchase the assets of one of the nation's largest rehab and nursing home chains in a five-round bankruptcy auction on Wednesday.
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Genesis HealthCare selected 101 West State Street LLC after it outbid the stalking horse bidder, Genie 3 Partners LLC, according to public records filed in the U.S. Bankruptcy Court for the Northern District of Texas. This is the second auction the company has held to sell its assets after filing for Chapter 11 bankruptcy in July.
The healthcare chain will begin working directly with 101 West State Street as the bid awaits court approval, a Genesis spokesperson said in a statement.
“Genesis HealthCare is pleased that the competitive, court-supervised process has produced a winning bid that reflects the value this organization has consistently and carefully built over the past few years for residents, families, associates, communities and more,” the spokesperson said.
It is unclear who leads 101 West Street and where the LLC is registered. It was represented at the auction by Weil, Gotshal & Manges attorney Jeffrey Saferstein, who didn't immediately respond to Bisnow's request for comment.
The firm's winning offer included $343M in cash, a $100M promissory note and the assumption of $572M in Genesis' liabilities.
The backup bidder was named as Genie 3 Partners, a joint partnership between a company linked to nursing home executive Jacob Sod and Rowan Farber's Integro Asset Management LLC, which entered into the auction last week, Bloomberg reported.
Genie 3's final bid was $991M, divided into $341M in cash, the assumption of $572M in liabilities and a $78M promissory note.
Genesis, which has 200 nursing centers and senior living communities in 17 states and more than 1,000 locations controlled by subsidiaries, listed more than $1.5B in unsecured debt to creditors in missed rental payments, pension fund contributions and other unpaid services when it filed to restructure.
Genesis held its first bankruptcy auction in December. The winner was an affiliate of Genesis owner Joel Landau's Pinta Capital Partners, after it bid $40M in cash and an agreement to take on certain debts and bankruptcy expenses, Skilled Nursing News reported at the time.
But it failed when the judge refused to approve the insider bid, Reuters reported. The new bid from 101 West Street will go before U.S. Bankruptcy Judge Stacey Jernigan for approval on Jan. 20.
In the meantime, Genesis is working to shed leases where it can.
This week, Jernigan approved the termination of three Genesis leases for offices and therapy services in New York, New Hampshire and Pennsylvania, according to bankruptcy court filings.
"We would like to take this opportunity to remind those we serve that this next step does not change our operations or services, and our teams remain focused on improving the lives we touch through the delivery of high-quality healthcare and everyday compassion," Genesis' spokesperson said.
Its bankruptcy has been criticized by some politicians, including Democratic Sen. Elizabeth Warren, who has pushed to lessen private equity's influence in the healthcare space.
“The results of the auction today look like a better deal for victims, but in the long run, it’s clear that we must keep working to root out corporate greed from health care altogether,” Warren said in a statement, The Boston Globe reported.
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