Award-winning SNF reorganization and turnaround
Tabor Manor Care Center
A skilled nursing provider faced possible closure due to pending QAAF obligations. Gibbins Advisors delivered a six-month Chapter 11 (Subchapter V) bankruptcy process to secure its short-term stability and long-term viability.
Situation Overview
The skilled nursing facility, family-owned for nearly 50 years and an important local employer, was recovering from the impact of the COVID-19 pandemic and held insufficient cash to repay the State of Iowa’s Quality Assurance Assessment Fees (“QAAF”). Negotiations with the state reached an impasse due to statutory-based repayment requirements.
Images are for illustrative purposes only.
Summary
Sector:
Rural, family-owned Skilled Nursing Facility (SNF)
Approx. Size:
46 beds, 50+ employees
Our role:
Financial Advisor to the Debtor
Key Results
Successfully negotiated new 10+ year payment plan for state QAAF obligations and bank loan.
Many unsecured creditors were fully repaid, with many others receiving a substantial portion of their prepetition claims.
Jobs and a long-time family owned business were maintained.
Role
Gibbins Advisors was retained to develop a restructuring plan that would enable the facility to deliver an operational turnaround and pay its loan and QAAF obligations over a realistic time period. Managing short term liquidity while positioning the business for long term viability were key objectives.
Approach
Early engagement with State representatives revealed the scale of the challenge to resolve out-of-court. In collaboration with counsel, we determined that a Chapter 11 (Subchapter V) bankruptcy would provide an efficient forum for resolving the company’s issues. The secured lender was supportive of the approach.
Key Accomplishments
The State’s ability to negotiate extended payment terms was made possible by the bankruptcy filing, while the Debtor also benefited from the automatic stay which improved cash flow.
Under the approved Plan of Reorganization, the Company achieved:
Extension on the QAAF obligation to be paid over 10 years instead of 18 months.
Extension on repayment of the secured loan, which was already past the original maturity date, to be repaid over a further 11.5 years.
Payment of many unsecured creditors, with many others receiving a substantial portion of their prepetition claims.
Facility remains open, all jobs preserved at the facility in the small Iowa town, and owners retained their entire equity interest.
Impact at a Glance
Payments Before and After Filing
Monthly QAAF + Secured Debt Service
70%+ reduction in debt service obligations resulting in over $43K per month in additional cash available for operations compared to repayment plan proposed by creditors pre-petition.
