Abri Health Care, the company that emerged from the bankruptcy of skilled nursing operator Senior Care Centers, itself filed for Chapter 11 bankruptcy protection on April 16, according to landlord LTC Properties (NYSE: LTC) and court filings.
Senior Care Centers LLC, now an Abri subsidiary, is owned 100% by Abri Health Services, LLC, which in turn is 100% owned by Abri Care Group, LLC; it is also included in Abri’s Form 201 filing as an affiliate in the bankruptcy case.
The filing comes roughly a month after the announcement that Senior Care Centers, which declared bankruptcy in December 2018, had reemerged from bankruptcy under new ownership and with new investment, as Abri Health Care. At the time of the announcement, Abri was operating 22 facilities across Texas, with facilities owned by real estate investment trust landlord (REIT) LTC Properties not included in that portfolio.
Those facilities were the subject of a dispute, and according to Abri’s announcement in March, it had determined it would no longer seek to operate those properties.
In a Form 8-K filed with the U.S. Securities and Exchange Commission on April 16, LTC confirmed the bankruptcy filing by Abri and Senior Care Centers. Senior Care Centers and certain of its subsidiaries and affiliates had assumed LTC’s Senior Care master lease, the REIT noted, with Senior Care and its affiliates emerging from bankruptcy in March of last year.
“Concurrently with their emergence from bankruptcy, in accordance with the order confirming Senior Care Debtors’ plan of reorganization, Abri was formed as the parent company of reorganized Senior Care Debtors and became co-tenant and co-obligor with reorganized Senior Care under LTC’s master lease,” the filing said. “As of April 16, 2021, the Lessee leases and subleases to affiliates 11 skilled nursing centers in Texas, including approximately 1,400 beds, under a master lease with LTC.”
LTC’s annualized rental revenue from Abri/Senior Care is about $15 million, or “9.2% and 9.6% of LTC’s annualized GAAP and cash revenue, respectively, as of December 31, 2020,” the filing noted. LTC has not received rent from Abri/Senior Care since February of this year, it added.
LTC sent a notice of default for non-payment of rent for March and additional charges owed under the master lease, followed by a notice of termination of that lease effective April 17, according to the SEC filing.
Abri/Senior Care owe LTC a current minimum monthly rent of $1.2 million according to LTC’s 8-K, and LTC was in the process of transitioning the Abri portfolio to HMG Healthcare at the time of the bankruptcy filing, pursuant to a master lease. The goal is to complete the transition by the end of the second quarter, LTC said in the 8-K.
In a statement sent to Skilled Nursing News via email on April 20, Abri blamed the bankruptcy filing on an ongoing dispute with TXMS Real Estate Investments, Inc., a subsidiary of LTC according to the REIT’s most recent Form 10-K, and the official landlord of the Abri portfolio owned by LTC.
“The filing is a direct result of the vexatious litigation and unreasonable actions of TXMS Real Estate Investments, Inc.,” the statement said. “We took this action to protect our business and ensure our resources remain focused on providing the absolute best care for our residents as we endeavor to resolve this matter.”
LTC was unavailable for comment.
In the April 19 declaration in support of the Chapter 11 filing, Abri/Senior Care CEO Kevin O’Halloran argued that the debtors were willing to turn over the 11 facilities owned by TXMS “if the parties could agree on a reasonable operations transfer agreement.”
In the declaration, O’Halloran alleged that TXMS sent the notice of termination to the master lease — effective April 17 — on April 7, with the demand that Abri/Senior Care immediately execute on a set of operation transfer agreements that had not been reviewed or negotiated.
“In addition to demanding that the Debtors transfer their business for no consideration, TXMS continues to insist that the Debtors have an obligation to pay the full amount of all of TXMS’s alleged claims under the Master Lease (potentially $64 million),” O’Halloran wrote in the declaration.