WILMINGTON, Delaware — A judge in Delaware on Friday approved an expedited bankruptcy plan for Toledo’s HCR ManorCare Inc. that will allow the nation’s second-largest operator of eldercare facilities to become owned by its landlord later this year.
In signing off on the 41-page plan, which was agreed upon by all the parties involved before it was filed on March 4, Judge Kevin Gross of U.S. Bankruptcy Court in Wilmington, Del., noted that there had been only one objection (by an individual filing a private claim against ManorCare) and a few requests to clarify plan verbiage.
But the judge added that the three principles of the plan, debtor ManorCare, landlord Quality Care Properties of Bethesda, Md., and chief investor private-equity firm The Carlyle Group, had all signed off on it.
Under the agreement, the Carlyle Group will lose its equity stake, Quality Care will own ManorCare, and former ManorCare CEO Paul Ormond, who left last fall, gets $116.7 million in previously deferred compensation.
Claimholders, which included vendors, were allowed to vote on the plan. It received 100 percent approval.
As part of his approval order, the judge dismissed an earlier petition by Quality Care Properties that sought to put ManorCare into receivership.
It was the receivership petition that led to the bankruptcy. It was filed last August after ManorCare defaulted on rent payments to Quality Care.
Under its lease, the default by ManorCare triggered an immediate debt of $445.8 million — mostly in future rent payments — owed to Quality Care through leases for 450 senior living facilities that the Toledo firm uses to operate.
ManorCare, which has nearly 50,000 employees nationwide and nearly 2,000 in the Toledo area, will be owned by Quality Care when it emerges from bankruptcy sometime in the third quarter.
Quality Care, which is a real estate investment trust with just 10 employees led by turnaround specialist Mark Ordan, will have to give up its REIT status once it gains control of ManorCare.
Quality Care already has chosen an executive team to run ManorCare.
The team is led by Guy Sansone, managing director at turnaround advisory firm Alvarez & Marsal, who will become chief executive officer and president. Laura Linynsky, who worked with Mr. Ordan when he helped turn around retirement property firm Sunrise Senior Living, will become chief financial officer, treasurer, and executive vice president.
Richard Parr, ManorCare’s general counsel since 2006, will become secretary and vice president.
Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. Comments that violate these standards, or our privacy statement or visitor's agreement, are subject to being removed and commenters are subject to being banned. To post comments, you must be a registered user on toledoblade.com. To find out more, please visit the FAQ.