Genesis HealthCare announced Monday that an insider bid had won an auction for all its assets.

CPE 88988 LLC, an affiliate of Genesis owner Pinta Capital Partners, submitting the winning bid, according to a news report. The bid was for $40 million in cash as well as an agreement to take on certain debts and bankruptcy expenses from Genesis. The total amount could reach more than $120 million according to the court documents filed in Texas.

The court documents reviewed by Skilled Nursing News detail a delayed bidding process. The auction was initially set to occur on Nov. 13. Two additional bids from unnamed sources were submitted after the auction opened Nov. 19. CPE 88988 LLC reportedly raised its bid from $15 million in response. In the court documents, Genesis said it reviewed all the bids with its Special Restructuring Committee. It did not designate a back up bidder.

While CPE 88988 LLC submitted the winning bid, the auction still has to be approved at a planned Dec. 10 hearing. Reports indicate that Genesis’ court-appointed creditors committee may oppose the sale. The committee previously raised concerns about the auction process favoring the “stalking horse” bid, that is, an inside bid from an entity chosen by Pinta and Genesis leadership.

The court filings show a special hearing was held Nov. 25 to address these objections, and a seven day extension to file objections to the bidding procedures and winning bid.

The nursing home giant filed Chapter 11 bankruptcy in July. Genesis currently operates 175 nursing homes in 18 states, and had more than $2 billion in debt at the time of filing.

Malpractice lawsuits and lawmaker concerns

Genesis is facing more than 200 wrongful death, neglect and malpractice lawsuits. A bankruptcy judge halted proceedings until the sale of the company was finalized, saying any action could force the full shutdown of the company, putting patients at risk. In July, the company said it owed $259 million to plaintiffs, including settlements that the company had agreed to pay. Plaintiffs have argued the company owes far more.

Lawmakers have heavily criticized private equity’s role in the bankruptcy. An October letter led by Democratic Sen. Elizabeth Warren accused the company of “looting” the provider.

The letter alleged the company’s current problems stemmed from years of extraction, starting in 2007 with the initial purchase from JER Partners and Formation Capital. The group sold off Genesis real estate while adding to debt through acquisitions. JER Partners’ initial purchase also included a sale-leaseback agreement, saddling Genesis with high rents. ReGen Healthcare, another private equity firm, purchased most of Genesis’ equity in 2021, narrowly staving off a bankruptcy at the time. CPE 88988 LLC is led by Joel Landau, who also leads ReGen Healthcare. The lawmakers accuse ReGen and Landau of further degrading operations.

“This precarious situation appears to have been the result of years of private equity looting of Genesis, including by JER Partners and, most recently, by Mr. Landau’s ReGen Healthcare,” the letter dated Oct. 7 stated. “We are further concerned that Genesis and Mr. Landau may be using the bankruptcy system to wipe away Genesis’s debts and claims to victims by selling the company at a discount to insiders.”

Private equity’s involvement also previously drew fire from Governor Josh Shapiro of Pennsylvania, where Genesis is headquartered and has the largest footprint, with 42 of its 175 facilities located in the state.

The July bankruptcy filings outlined how $100 million in funding from ReGen Healthcare and a lease restructuring with Welltower, to which the company owes more than $112.6 million, helped Genesis avoid filing for Chapter 11 in 2021. This funding included roughly $8 million per month for malpractice settlements.