An operator of 28 skilled nursing facilities in Florida, Georgia and Mississippi filed for Chapter 11 bankruptcy, citing “significant tax challenges” arising from the COVID-19 pandemic.
Gulf Coast Health Care LLC, based in Pensacola, Fla., Has indicated in filings with the U.S. Delaware District Bankruptcy Court that it has entered into a proposed Restructuring Support Agreement that involves the transition of facilities. towards new operators.
Gulf Coast leases 24 facilities from certain affiliates and indirect subsidiaries of Omega Healthcare Investors, Inc. and four facilities from certain affiliates and indirect subsidiaries of Eagle Arc Partners LLC – formerly known as Blue Mountain Holdings, according to a statement official prepared by Mr. Benjamin Jones, Director of Restructuring of Gulf Coast Health Care and Senior General Manager of Ankura Consulting Group LLC.
Jones claimed that Gulf Coast has seen declining occupancy levels for residents, ‘crippling’ staff retention issues and increased spending related to the COVID-19 pandemic.
While federal financial assistance helped mitigate losses and expenses related to COVID-19, Gulf Coast received “very limited” state assistance.
âWhile the Company has taken steps over the past few months to improve occupancy levels for residents, maximize staff efficiency and reduce operating costs, these efforts have failed to address the gaps in the business. operation of Debtors. And, what is even more troubling, the pressures on the job not only persist, but appear to be escalating, âJones wrote in the statement.
Jones specifically referred to the Biden administration’s vaccination mandate in the court document, noting that while 79% of residents are fully vaccinated, only around 45% of Gulf Coast employees are vaccinated.
These facilities have around 3,350 licensed beds, 2,244 residents and employ more than 3,100 in local communities, the statement said.
Omega sent Gulf Coast a notice of default on July 8 stating that it had applied part of its security deposit to the unpaid rent amounts and subsequently demanded more than $ 2.4 million within 10 days, according to the statement.
On August 10, Omega issued a second notice of default and expedited all rents owed, demanding payment of nearly $ 217 million.
Gulf Coast owes approximately $ 376,000 in unpaid rent to “Blue Mountain owners,” according to the statement.
Omega CEO Taylor Pickett said during the REIT’s second quarter earnings call that “the combination of a significant drop in occupancy rates and a tight labor market with wages in increase and a shortage of staff began to create liquidity problems for some operators “.
Omega previously said three operators were unable to pay the rent, which represents 8.6% of contract rents and mortgage payments from the Maryland-based real estate investment trust (REIT) in the third quarter.
None of the Gulf Coast owners responded to a request for comment.