After a federal judge approved Genesis HealthCare’s Chapter 11 liquidation plan Wednesday, one consequence across the nursing home giant’s nationwide operations is that patients and families with claims against the company will likely recover about a quarter of what they are owed.
The outcome has renewed concerns among plaintiffs’ attorneys about a broader pattern in which providers face mounting lawsuits over alleged poor care, then use bankruptcy to limit their liabilities.
More than $200 million in Genesis assets will be placed in a liquidation trust to reconcile claims and distribute payments to unsecured creditors. A creditors’ board will oversee the trust’s budget and distributions, and payments could begin within the next year or so.
According to a story in the Santa Fe New Mexican, patients and families with pending settlements, jury awards and lawsuits related to personal injuries, negligence and wrongful deaths are expected to recover up to 26% of what they are owed.
Attorneys for an Albuquerque-based law firm representing affected families in the state told the news outlet that they welcomed the progress but criticized the limited compensation, saying it falls far short of the losses their clients have suffered. They also questioned whether the bankruptcy process would provide meaningful accountability and whether residents would receive better care under the new owner.
Genesis operates 21 facilities in New Mexico and accounts for roughly one-third of the state’s nursing home beds.
The bankruptcy comes amid concerns about Genesis’ quality of care outlines by a KFF report and the New Mexican’s own investigation.
In New Mexico, 33% of Genesis facilities received the lowest overall rating of one star, compared with 24% of nursing homes statewide, the newspaper noted. Santa Fe’s Casa Real facility remains unrated by federal regulators because of a history of serious quality issues.
Genesis also faces hundreds of personal injury and wrongful death claims in New Mexico alone.
The sale marks a major step toward resolving Genesis’ financial restructuring, but questions remain about compensation for victims, corporate accountability and whether the change in ownership will improve care for nursing home residents, according to Dusti Harvey and Caela Baker, partners in an Albuquerque-based law firm that specializes in nursing home abuse litigation and has brought dozens of cases against Genesis since its founding 2005.
“For the families we represent, the questions still remain: how much accountability there will be, when they will receive their compensation and whether residents will receive better care with the new company,” Harvey told the New Mexican.
Meanwhile, Baker argued that Genesis reflects a troubling pattern in which healthcare companies use complex corporate structures to funnel money to executives while underfunding nursing homes and understaffing facilities before turning to bankruptcy amid mounting lawsuits.
“They’re letting injuries and deaths happen, and then once the lawsuits become overwhelming, they file for bankruptcy,” Baker said. “We saw it with Genesis.”
For its part, Genesis plans to proceed with uninterrupted care of its residents, a spokesperson told Skilled Nursing News.
“The affiliated centers and their employees will operate under [new] ownership following the transaction, with a continued commitment to providing high-quality care to patients and residents. Center operations continue as usual, with no interruption to patient and resident care,” the spokesperson said.
Genesis HealthCare secured court approval for the sale of its nationwide nursing home business to an affiliate of New Generation Health LLC for nearly $1 billion as part of its bankruptcy proceedings. Buyer 101 West State Street LLC will take over Genesis HealthCare’s operations and employees.
Although the deal is structured as a liquidation, all 175 facilities will remain open, with some awaiting regulatory approval to formally transfer ownership and temporarily operate under interim managers and existing Genesis licenses.
Genesis filed for Chapter 11 bankruptcy 15 months ago on July 9, 2025.
Companies featured in this article:
Genesis HealthCare, New Generation Health, West State Street
