As one long-term-care giant emerged from bankruptcy last week, two smaller companies filed for Chapter 11.
Genesis Health Ventures, Kennett Square, Pa., said it received final approval last week from the U.S. Bankruptcy Court in Wilmington, Del., to emerge from Chapter 11. The nursing-home operator and specialty pharmaceutical provider last month received conditional approval of its reorganization plan.
Genesis also said it negotiated a new $515 million senior secured credit facility. Genesis, which operates 278 nursing homes and 35 assisted-living facilities, is the second large nursing-home chain to complete bankruptcy reorganization this year. Vencor, Louisville, Ky., changed its name to Kindred Healthcare with its emergence from Chapter 11 in April.
In a widely anticipated move, Assisted Living Concepts, Portland, Ore., filed for bankruptcy protection in the U.S. Bankruptcy Court in Wilmington.
The company said holders of $75.9 million of its debentures, representing about half of outstanding debentures, have agreed to a reorganization proposal under which creditors would receive 96% of the reorganized company's common stock and $55.5 million in new notes. Current stockholders would receive the remaining 4% stake in the reorganized company. The court must approve the plan, but no hearings have been set.
ALC first publicly revealed the possibility of bankruptcy in a securities filing in May. The company lost $8.8 million, or 51 cents per share, for the first six months of 2001, compared with losses of $7.6 million, or 44 cents per share, in the year-ago period. Revenue was up 10.3%, to $74.2 million. The company listed $331.4 million in assets and $252 million in debts as of June 30 in its bankruptcy petition. Also as of June 30, ALC operated 185 assisted-living facilities.
The second long-term-care company to declare bankruptcy last week was Fountain View, Burbank, Calif., which operates 43 nursing homes and six assisted-living facilities. Fountain View said it filed for Chapter 11 protection in the U.S. Bankruptcy Court in Los Angeles because a lien on the company's accounts stemming from a $6.1 million jury award in a resident-liability case in April left it strapped for cash. Fountain View said it plans to appeal the verdict, but its insurance company is refusing to post the bond necessary for the appeal to go forward. The plaintiff's attorneys placed the lien on the company's accounts after settlement negotiations broke down. Fountain View said its operations, which are in California and Texas, will continue normally for its 5,000 patients and 6,000 employees.
The company listed $264.1 million in current liabilities as of June 30, but only $72 million in current, or liquid, assets, according to its most recent quarterly report. The bankruptcy filing was not immediately available. For the six months ended June 30, Fountain View lost $9.5 million on $155.4 million in revenue, compared with a loss of $2.6 million on $143.1 million in revenue in the year-ago period.