The sale of Petersen Health Care’s properties will now proceed after a deal was reached with one of its lenders to allow a court-appointed receiver to maintain operations of the nursing home giant’s eight Illinois facilities.

Among the largest nursing home operators in the nation, Petersen filed for bankruptcy in March.

The sale of these properties was delayed due to last month’s dispute with the lender – X-Caliber Funding LLC – over whether Petersen could even file for bankruptcy on behalf of the eight Illinois properties currently being managed by the court-appointed receiver, Michael Flanagan, an attorney specializing in long-term care.

Following the agreement, Petersen and X-Caliber will now go forth with a plan set in place in January in which Flanagan would take charge of the eight facilities, Monday’s hearing in federal bankruptcy court shows, the Peoria Journal Star reported.

If the properties are not sold by July 15, their ownership would revert to Flanagan.

Petersen’s attorney Daniel McGuire, said the bankruptcy allowed the company to remain operational pending a sale to one or multiple buyers.

“These homes have tremendous value as nursing homes and long-term care facilities, but not a tremendous amount of value as empty pieces of real estate,” McGuire told the Peoria Journal Star. “What we’re looking to achieve by keeping things operational will not only benefit the residents, it is also critical to making sure that we can repay our secured and unsecured creditors in these cases.”

The sale process was delayed by the data breach, he said.

Court documents show that as of May 1, Petersen had received 20 bids for its properties, including one that would include 41 facilities and another that would involve nearly all of Petersen’s 90 properties.

McGuire believes that the company could get around $300 million if the company’s 90 facilities across the Midwest are sold.

Petersen operates facilities across Missouri, Iowa and Illinois. The company employs nearly 4,000 staff, and its properties have the capacity to house 6,796 residents. Its revenue in 2023 was more than $339.7 million.

X-Caliber is a bridge lender, providing short-term financing for acquisitions, cash-out refinances, and value-add transactions related to senior housing and care facilities, among other asset types. It owns properties in Galesburg, Knoxville, Monmouth, El Paso, Flanagan, Kewanee and Polo.

Petersen filed for Chapter 11 bankruptcy on March 20 with more than $295 million in debt to multiple creditors, including X-Caliber, citing a slow post-pandemic recovery, inflation pressures, high operational costs, and staffing problems. 

About $45 million of that debt Petersen owes is under health care facility loans insured by the Department of Housing and Urban Development (HUD).

Petersen has enlisted Walker & Dunlop Investment Sales to broker the sale of the properties.

Skilled Nursing News reached Petersen for comment on these developments, but a response hadn’t been received by the time of publication.