A federal bankruptcy court on Wednesday gave Petersen Health Care the go-ahead to sell off the majority of its properties to a Skokie real estate investment firm.
Cascade Capital Partners was the entity behind Petersen Acquisitions, the limited-liability corporation that put up the stalking horse bid for the Peoria-based nursing home company's properties ahead of an auction.
The investment firm is managed by the former leadership of Legacy Healthcare, which operates nursing homes in the Chicago area, as well as parts of Iowa and South Dakota.
Cascade's winning $116 million bid was for all but five of the properties put up for auction earlier this month. Petersen Health Care's portfolio is estimated to be worth somewhere between $215 and $305 million. The company owes at least $295 million to its creditors.
That low acquisition price spurred objections from lenders looking to recoup their investments, but nine of the ten objections filed with the court were resolved before a Wednesday court date before U.S. Bankruptcy Court Judge Thomas Horan in Delaware.
The remaining objection by GMF Petersen Note was overruled by Horan, who noted the lender still wasn't in a financial position to make a credit bid, despite their argument the bidding process was unfair to them.
Petersen's attorney, Dan McGuire, said the auction process was "robust," and cited a recent court case, saying the best way to determine the value of an asset is to sell it on a fair and open market.
The eight properties currently managed by lender X-Caliber Funding were removed from the sale. Those include nursing homes in El Paso, Galesburg, Knoxville, Flanagan, Monmouth, Kewanee, and Polo, Mo. Cascade's bid was reduced to $97.5 million to reflect the subtraction of seven nursing homes. One nursing home was also subtracted from the bid of HP Developers.
Details are still being worked out with the other two winning bidders, the Bank of Farmington and Hickory Point Bank & Trust.
PDF: See list of affected facilities
Nancy Peterman, the representative of the unsecured creditors in the bankruptcy case, said they share the disappointment with how the sales process played out, but they understand the need to get the nursing home residents safely transferred to the care of a new operator.
The unsecured creditors have subpoenaed CEO and owner Mark B. Petersen and his other companies in an attempt to gain more information on financial transfers involving the nursing homes, but Peterman said they've received no responses to their discovery requests. Petersen also owns the Louisville Slugger Sports Complex in Peoria, and a chain of hotels.
"That's becoming more of a critical issue given the sale price, because now we're really having to heavily look at potential causes of action," she said.
Those documents are supposed to be produced by July 18.
