Genesis Healthcare Inc. — an operator of skilled nursing and assisted living facilities — and its subsidiaries have filed for Chapter 11 bankruptcy.
With its headquarters in Kennett Square, Chester County, Genesis operates nearly 200 facilities in 17 states, including Pennsylvania — which includes locations in Berks, Bucks, Chester, Delaware, Lehigh, Montgomery and Northampton counties.
The company filed for relief Wednesday under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas Dallas Division. In its filing with the court, Genesis said it owes between $1 billion and $10 billion in debts.
In a news release, Genesis said it was taking steps to implement a financial restructuring “to address our legacy debt structure.”
“The goal of this filing is to emerge a stronger, healthier company poised to exceed our goals for clinical and operational excellence,” David Harrington, executive chairman of the Genesis Healthcare Inc., board of directors, said in a statement.
The process is designed to ensure that the company can continue operating in a seamless manner while allowing Genesis to address its liabilities associated with previously divested operations.
Genesis operates six facilities in the greater Lehigh Valley area: Lehigh Commons in Macungie, Bethlehem South and Bethlehem North skilled nursing and rehabilitation centers in Bethlehem, Easton Skilled Nursing and Rehabilitation Center in Palmer Township, Quakertown Center in Quakertown and Lopatcong Center in Phillipsburg.
Subject to court approval, the company has secured a commitment of $30 million in debtor-in-possession — known as DIP financing — from its existing lenders, Genesis announced. The DIP financing, combined with cash on hand and cash flow generated from ongoing operations, will support the business to satisfy its ongoing obligations.
The filing includes provisions to ensure Genesis staff members will retain their positions, pay and benefits. Vendor agreements will remain in place while the process moves forward.
Lauren Murray, Genesis HealthCare chief operating officer, said in a statement that the company remains “fully focused on and committed to providing the high-quality care you have come to expect.”
Chapter 11 of the U.S. Bankruptcy Code guides how a company can restructure its debt while continuing to operate normally during the reorganization, the release stated.
“We have much to be proud of for the tremendous progress we have made as an organization over the last several years as we have implemented a forward-looking, enterprise-wide shift from centralized to market-based operations,” Harrington added.
Genesis Healthcare is owned by Omega Healthcare Investors. On Thursday, Omega said it had made a change to its investor presentation following the announcement by Genesis.
“Omega believes this filing is a necessary and important step,” the company added to its Operator Updates portion of the presentation.
Omega added that it has elected to commit $8 million to fund a portion of the DIP financing. As part of Omega’s debtor-in-possession commitment, Genesis is required to pay Omega its monthly contracted rent — subject to court approval.
Court filings and additional information can be viewed at https://dm.epiq11.com/Genesis.
Genesis Healthcare Inc. subsidiaries include skilled nursing centers and senior living communities. In addition, Genesis subsidiaries also supply rehabilitation therapy to locations in 43 states.
