Court Approves Transfer of 16 Former Skyline SNFs to Cascade — with Conditions

A court in South Dakota approved the transfer of 16 skilled nursing facilities formerly managed by Skyline Healthcare to Cascade Capital Group, the Aberdeen News reported Thursday.

The facilities are currently under the temporary management of Black Hills Receiver, which was appointed in May of last year to stabilize 18 SNFs and one assisted living center in the state after Skyline’s financial collapse last year.

Black Hills Receiver had filed documents in April requesting that the operations of the facilities be transferred to the Skokie, Ill.-based Cascade, which oversees more than 135 facilities in 23 states.


But lender MidCap Financial argued that it would be unable to recoup unpaid debt from Skyline if the operations were sold. Soon after, the Sioux Falls, S.D.-based Avera health system also moved to stop the planned transfer of the SNFs, arguing that Skyline still owed it money for use of its Avera eCare telehealth services.

In the case of Avera, the receiver asserted that it would seek court direction on how to handle leftover funds when all necessary court-approved expenses, such as vendor services and employee payrolls, were paid at the facilities.

The court then approved the transfer to Cascade effective July 1, but with certain stipulations — including a direction that vendors who are owed for services during the receivership will be paid after MidCap is reimbursed, according to the documents.


Black Hills Receiver has to keep a detailed account of the funds received and expenses paid from before and up to the transfer date, the Aberdeen News reported, citing the court documents. That said, the receivership can cover payroll, benefits, and paid time off without further court approval through July 1.

Though approximate amounts for all the outstanding expenses were included in the court documents, Black Hills Receiver will have to submit financial documents and obtain approval if those expenses are significantly more than what is estimated.

The loan interest owned to MidCap — which is $247,275 according to the court documents cited by Aberdeen News — will be placed into a separate, interest-bearing account for the lender, once those above expenses are paid. MidCap will have 15 days to prove or disprove the amount.

Black Hills Receiver had also proposed last month to close the Covington Care and Rehabilitation SNF in South Dakota, which Cascade did not want to take over because of its financial and regulatory track record, the Aberdeen News reported.

The court approved the closure and said the receivership would be allowed to cover the operation and closing costs through August 1. Those funds will be distributed prior to MidCap receiving its interest, the publication noted.

Black Hills Receiver had no comment on the approval; Cascade had not returned a request for comment by press time.

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