(Reuters) HCR ManorCare files for bankruptcy with $7 billion in debt
Article by: Tracy Rucinski
(Reuters) - The second-largest U.S. nursing home operator, HCR ManorCare Inc, filed for Chapter 11 protection late Sunday with $7.1 billion of debt as part of a pre-arranged deal to transfer ownership to its landlord Quality Care Properties Inc (QCP.N).
Toledo, Ohio-based ManorCare, which operates skilled nursing, assisted living and memory care locations across the United States, had been battling with its landlord over unpaid rents since last year.
In a bankruptcy filing in Delaware, privately-owned ManorCare said revenues have failed to cover monthly rent obligations since 2012, a year after the master lease was signed. The lease covers 289 facilities.
It blamed shrinking margins at its post-acute and skilled nursing facilities on reduced government reimbursement rates, low occupancy, a shift toward new managed Medicare plans and alternative services such as home health care and retirement communities.
ManorCare said it owed $446 million in rent that was accruing at a minimum of $39.5 million every month.
The company was able to use profits from other growing businesses such as home health, hospice and outpatient rehab to help meet the rent until April 2017, when it defaulted on a prior credit facility...