Unknown Firm Wins $1B Bankruptcy Auction For Genesis HealthCare

A little-known company has emerged as the winning bidder in a $1B bankruptcy auction for Genesis HealthCare, one of the nation’s largest nursing home and rehabilitation chains.

Genesis selected 101 West State Street LLC after the firm outbid stalking horse bidder Genie 3 Partners LLC in a five-round auction, according to filings in the U.S. Bankruptcy Court for the Northern District of Texas. The auction marked Genesis’ second attempt to sell its assets since filing for Chapter 11 bankruptcy in July.

The healthcare operator said it will begin working with 101 West State Street as the deal awaits court approval.

“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,” a company spokesperson said.

Little is known about 101 West State Street LLC, including its leadership or state of registration. The firm was represented at the auction by Weil, Gotshal & Manges attorney Jeffrey Saferstein, who did not immediately respond to a request for comment.

The winning bid consists of $343M in cash, a $100M promissory note, and the assumption of $572M in Genesis’ liabilities.

Genie 3 Partners, the backup bidder, submitted a final offer valued at $991M, including $341M in cash, a $78M promissory note, and the assumption of $572M in liabilities. Genie 3 is a joint venture between a company tied to nursing home executive Jacob Sod and Integro Asset Management LLC, led by Rowan Farber, Bloomberg reported.

Genesis operates approximately 200 nursing centers and senior living communities across 17 states and controls more than 1,000 locations through subsidiaries. When it filed for bankruptcy, the company reported more than $1.5B in unsecured debt, including missed rent payments, pension obligations, and unpaid service costs.

A prior bankruptcy auction held in December fell apart after U.S. Bankruptcy Judge Stacey Jernigan declined to approve an insider bid from an affiliate of Genesis owner Joel Landau’s Pinta Capital Partners, according to Reuters. The new bid from 101 West State Street is scheduled for court approval on Jan. 20.

As proceedings continue, Genesis has been working to shed leases. The court just approved the termination of three leases for office and therapy spaces in New York, New Hampshire, and Pennsylvania.

Genesis said the bankruptcy process will not affect patient care or daily operations.

“This next step does not change our operations or services,” the spokesperson said. “Our teams remain focused on improving the lives we touch through the delivery of high-quality healthcare.”

The bankruptcy has drawn criticism from some lawmakers, including Sen. Elizabeth Warren, who has called for reducing private equity’s role in healthcare.

“While the auction results appear to be a better deal for victims, it’s clear we must keep working to root out corporate greed from healthcare altogether,” Warren said in a statement reported by The Boston Globe.

Source: Bisnow