Petersen Health Care’s sale of the majority of its properties to Cascade Capital Partners, a Skokie, Ill.-based real estate investment firm, was approved by a federal bankruptcy court on Wednesday.

The sale allows Petersen Health Care to move forward with a significant reorganization following its bankruptcy filing in March, enabling it to stabilize its financial position while ensuring continuity of care for residents across its properties.

The court’s decision follows a competitive bidding process overseen by Petersen Acquisitions, which placed a so-called stalking horse bid ahead of the auction.

Cascade Capital Partners, managed by former executives of Legacy Healthcare, secured the deal with a winning bid of $116 million for most of Petersen Health Care’s properties. The nursing home company, based in Peoria, Illinois, had placed assets valued between $215 million and $305 million on the auction block, aiming to address its substantial debt of at least $295 million.

Legacy Healthcare operates nursing homes in the Chicago area, as well as parts of Iowa and South Dakota.

Ten nursing homes were excluded from the sale. These are still under Petersen Health’s ownership and being managed by a federal court receiver and for which X-Caliber Funding is a lender. To accommodate for the exclusion of these nursing homes, Cascade’s bid was reduced to $97.5 million from $116 million.

A spokesperson for X-Caliber told Skilled Nursing News Thursday that the organization was reviewing its options for the future of these nursing homes.

“Our primary goals have always been and will continue to be maintaining stable operations of the facilities and delivering the best and optimal outcome for our stakeholders and investors,” the spokesperson said. “We are committed to achieving these goals and are confident that our actions to date have done and will continue to do so.”

On Tuesday, the X-Caliber spokesperson had shared that the company filed a notice of non-consent to the bid realized at the auction.

“We have opted to exercise our legal right and forgo acceptance of the auction bid to ensure the best outcome for our stakeholders and investors while maintaining stable operations of the facilities,” the spokesperson said.

As for the rest of the properties whose sale was approved today, other winning bidders include the Bank of Farmington and Hickory Point Bank & Trust, who are finalizing their agreements.

Despite objections from some creditors about the sale price being too low, the bankruptcy court resolved most issues prior to the hearing, except for one objection from GMF Petersen Note, according to a report in the local public radio affiliate, WCBU. The judge ultimately overruled this objection, emphasizing the fairness and competitiveness of the auction process.

Petersen’s attorney, Dan McGuire, defended the transparency of the auction, citing legal precedent that supports determining asset value through open market sales, the WCBU report states.

Representing unsecured creditors, Nancy Peterman expressed disappointment with aspects of the sales process but acknowledged the necessity of transitioning nursing home residents to new operators safely, WCBU reported. 

CEO Mark B. Petersen and his affiliated companies have been subpoenaed to gain more insight into the financial transfer of the nursing homes amid the bankruptcy proceedings.

“That’s becoming more of a critical issue given the sale price, because now we’re really having to heavily look at potential causes of action,” she said.

Peterman’s team has not received responses to the discovery requests, and those documents are slated to be produced by July 18.