A major nursing home chain, the second largest in the country is facing the real possibility of a business bankruptcy but is currently trying to navigate a dispute between the chain’s chief officer and the firm which is the landlord of the chain’s many properties. A private equity firm which bought the chain is also involved.
When the private equity firm bought the chain 10 years ago, the CEO signed an agreement calling for $100 million, which would be paid as deferred compensation in order to save the manager some tax liability. Perhaps because of the chain’s financial problems, the CEO now wants an immediate payout. Sources indicate that if a business bankruptcy does get filed, the CEO will likely get $60 million.
Other creditors have also been threatening the chain with prompt legal action if the business does not start paying its debts. According to sources, the nursing home chain is $380 million in the hole to several different creditors which are growing impatient, even though the private equity firm which purchased the chain assured authorities that the purchase would not put the chain into financial trouble.
The chain is also currently being plagued by a federal investigation into its billing practices. The Department of Justice is accusing the chain of billing rehabilitation services unnecessarily to Medicare, a federal healthcare program for seniors. While there has been no legal determination of fault, the investigation continues.
Trouble with regulatory authorities and changes of ownership are both factors that can, in bad cases, put a company in financial trouble. Should this happen to Garnerville-area or Rockland County business, the business owners and managers should be aware that bankruptcy is an option.
Source: New York Post, “Nursing home CEO wants $100M payout amid bankruptcy threat,” Josh Kosman, June 2, 2017.