Award-winning restructuring of a 10-site senior care portfolio
QHC Facilities, Inc.
An operator of eight SNFs and two ALFs in Iowa filed Chapter 11 amid severe liquidity constraints and the COVID-19 pandemic. Gibbins Advisors navigated extremely tight liquidity through to a successful s363 sale with a smooth transition of operations to the buyer, and a recovery to general unsecured creditors.
Situation Overview
QHC Facilities, LLC and affiliates operated eight skilled nursing facilities and two assisted living facilities in Iowa. Years of declining census, Medicaid rate reductions, and rising nurse staffing costs had eroded profitability and created severe cash flow challenges. The Company also faced leadership disruption following the deaths of its Owner/CEO/CFO and, shortly thereafter, his wife, the sole owner.
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Summary
Sector:
Skilled Nursing and Assisted Living Facilities
Approx. Size:
Nearly 750 beds
Our role:
Phase 1 – Diagnostic
Phase 2 – Chapter 11
Phase 3 – Liquidation Trustee
Key Results
Managed very tight liquidity through to the successful sale of key assets, and ultimately a return to unsecured creditors.
Won M&A Advisor’s 2024 “Restructuring of the Year” ($10m to $50m)
Role
Engaged by the Company for across four key phases:
Phase 1 – Rapid diagnostic and options assessment;
Phase 2 – Treasury operations, auction and sale process in Chapter 11 bankruptcy;
Phase 3 – As Liquidation Trustee – manage the estate wind down and distribution to creditors.
Approach
Rapid business review of profit drivers, costs, market, and overhead.
Obtained DIP revolving credit facility from Secured Lender to stabilize operations and fund a sale process.
Managed an accelerated sale process and auction in Chapter 11 bankruptcy: negotiated with backup bidder when winning bidder defaulted.
Key Accomplishments
Stabilized operations and managed extremely tight liquidity.
Successfully sold and transferred operations of six facilities to a buyer, and safely closed another four facilities.
Delivered an orderly transition in a distressed, high-risk environment.
Successfully negotiated with the state on priority claims which enabled a recovery to flow to general unsecured creditors.
The team of professionals won the M&A Advisor’s 2024 Award for “Restructuring of the Year ($10m to $50m)
