An Illinois-based nursing home operator, which owns nearly 100 senior living properties across the state as well as others in Missouri and Iowa, faces legal challenges as prosecutors point to alleged unpaid loans.
Petersen Health Care faces two foreclosure cases filed in the Illinois Northern District Court – litigation is linked to an alleged failure to repay nearly $51 million in loans, according to case filings and a report from the Journal Star. Seventeen of Petersen’s properties were named in the cases, with eight being placed in receivership.
The first foreclosure suit filed on Jan. 23 by X-Caliber Funding LLC alleges that eight Petersen properties owe more than $31 million. In a statement, Petersen said the decision was “a very aggressive action.” These properties were placed in receivership on Jan. 25, which means Petersen is no longer running the facilities.
The original bridge loan was for $40 million secured in October 2019, court documents show.
The receiver, Kansas-based Flanagan & Associates, told staff of the eight properties that the business will continue to operate under the management of Walnut Creek Management Company, an affiliate of Tutera Senior Living & Health Care, according to the Journal Star report.
Staff were also told they shouldn’t have trouble cashing checks, but if they do, to contact managers. The Tutera Group visited the sites without prior notice to assess and manage the care in these facilities, Petersen said in a statement to the Journal Star.
“Petersen Health Care continues to own the facilities and is cooperating with Tutera to help ensure there is minimal impact on our staff and that our residents continue to receive quality care,” the Illinois operator said.
Petersen is working with its lenders to find a solution to return the facilities to their management, the team noted, adding that inadequate state and federal funding along with staffing challenges were “significant factors” leading up to the current receivership.
The second lawsuit was filed on Jan. 31 by Maryland-based Capital Funding and involves nine other Petersen facilities – eight in Illinois and one in Missouri – in default with an outstanding balance of more than $19 million in unpaid Housing and Urban Development (HUD) loans.
Capital Funding alleged a breach of contract and is seeking foreclosure. The loans were supposed to be paid back on Jan. 21, 2024. Another hearing for this case is scheduled for Monday.
Skilled Nursing News reached Petersen for comment, but hadn’t received a response by the time of publication.
Companies featured in this article:
Capital Funding, Flanagan & Associates, Journal Star, Petersen Health Care, Tutera Senior Living & Health Care, Walnot Creek Management Company, X-Caliber Funding
