A midsized nursing home chain that last year emerged from bankruptcy is back in bankruptcy again, this time with plans to liquidate. Stepping in to manage most of the facilities as the company gets out of the business is none other than Vencor, a national chain itself in bankruptcy.
RainTree Healthcare Corp. a Phoenix-based chain with 35 facilities in six states, filed for protection in U.S. Bankruptcy Court in Phoenix Feb. 29. Among its major troubles were low occupancy rates, which had dropped after the company, then called Unison Healthcare Corp., had sought bankruptcy protection in 1998.
Vencor came into the picture at the behest of Omega Healthcare Investors, an Ann Arbor, Mich.-based real estate investment trust from which RainTree leased most of its buildings. With bankruptcy court approval, Omega took possession of 30 of RainTree's nursing homes and contracted with Vencor to manage them. RainTree's other five homes have been returned to their landlords.
"Our concern was to stabilize patient care," said Omega Chief Operating Officer Scott Kellman, adding that the REIT had been paying salaries to RainTree employees as the company's finances deteriorated.
"We are far more concerned about the patients than how much money we are going to make on this, or lose on it," he said.
Kellman said Vencor's own financial turmoil doesn't disqualify it as an operator.
"Don Finney is the finest nursing home operator in the nation," he said, referring to Vencor's president of health services. "The fact that Vencor happens to be in bankruptcy has limited impact on their ability to manage and operate nursing homes. The bankruptcy has more to do with their capital structure and government issues than it does with operational capabilities."
RainTree has filed a petition to convert to a Chapter 7 liquidation proceeding next month. The company filed under Chapter 11 to ensure that the bankruptcy didn't interfere with nursing home operations, according to RainTree's attorney, Gerald Smith.