Senior Care Centers Files for Bankruptcy, Blaming ‘Expensive Leases’

Senior Care Centers announced Tuesday that it is filing for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Northern District of Texas.

The move will allow Senior Care Centers, which has almost 10,000 residents and nearly 11,000 employees, to address “burdensome debt levels and expensive leases,” according to a press release announcing the bankruptcy filing.

Senior Care Centers will continue paying vendors for the goods and services provided during the Chapter 11 process, in addition to continuing to cover payroll, according to the company.


“After careful analysis, we determined that the protections afforded by the Chapter 11 process are the best way to address the company’s debt and costly leases while allowing us to continue to provide all the top-level care and support our residents deserve,” Kevin O’Halloran, Senior Care Centers’ chief restructuring officer, said in the release.

The Dallas-based skilled nursing provider operates and manages more than 100 skilled nursing and assisted/independent living communities in Texas and Louisiana.

There were hints of trouble last month when the Irvine, Calif.-based Sabra Health Care REIT (Nasdaq: SBRA) terminated the leases on 36 SNFs operated by Senior Care Centers after the provider stopped paying rent.


Sabra CEO Rick Matros said on the real estate investment trust’s (REIT) third-quarter conference call that Senior Care Centers’ decision to withhold rent was a negotiating tactic in Sabra’s pending sale of the facilities.

Sabra had entered a non-binding letter of intent to sell its 36 Senior Care Centers SNFs and two senior housing communities in August of this year. The sale is expected to be completed in early 2019, Sabra said in its third-quarter earnings press release, and Matros told SNN in an e-mail that Senior Care Centers’ bankruptcy does not affect the REIT or the sale process.

Senior Care Centers chief operating officer Michael Beal called out high rent payments in the release announcing the bankruptcy filing.

“As the entire industry has seen, the leases associated with the communities have become cost-prohibitive,” Beal said in the statement. “This kind of action is absolutely necessary to address those costly leases while continuing to care for our patients and residents.”

Senior Care Centers has not made any final determinations regarding any of the facilities, spokesman Tom Becker said in a statement e-mailed to SNN.

“We intend to use this process to identify the best path forward for all of our communities and actively work with the owners, including Sabra, while ensuring all of our patients and residents are cared for,” Becker said. “Patient and resident care is and will continue to be our main priority.”

UPDATE, December 5: LTC Properties, Inc. on Wednesday announced that Senior Care Centers hasn’t paid its rent for December, and that the REIT has already begun working with a new operator to take over the properties. 

Written by Maggie Flynn

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