After facing significant fiscal challenges brought by the COVID-19 pandemic, an operator with 28 nursing facilities in Florida, Georgia, and Mississippi has declared Chapter 11 bankruptcy.
Transitioning Facilities To New Operators
The Pensacola Florida-based Gulf Coast Health Care LLC stated in the documents it filed in the U.S. Bankruptcy Court for the District Delaware that it has come to a point of a planned restructuring support agreement, involving transitioning the facilities to new and different operators, according to Skilled Nursing News.
As per a formal declaration prepared by M. Benjamin Jones, the chief restructuring officer for Gulf Coast Health care, Gulf Coast rents 24 facilities from indirect affiliates and subsidiaries of Omega Healthcare Investors Inc. They also lease from four facilities from indirect affiliates and subsidiaries of Eagle Arc Partners LLC or previously known as Blue Mountain Holdings.
In the report by Skilled Nursing News, the Gulf Coast suffered from diminished resident occupancy levels, staff retention uses, and a rise in expensed linked to the COVID-19 pandemic, according to Jones.
Limited State Assistance
Although there has been federal financial assistance provided, the Gulf Coast has received limited state assistance.
Jones wrote in the declaration that “although the company has taken steps in recent months to improve resident occupancy levels, maximize staffing efficiencies, and reduce their operation costs, these efforts have not come close to addressing the Debtors’ operating shortfalls. And, even more troubling, labor pressures not only persist but appear to be worsening.”
In the court document, Jones also referenced in particular the vaccine mandate of the Biden administration, saying that only an estimated 45% of Gulf Coast’s employees are vaccinated, the report said.
As stated in the declaration, the Gulf Coast’s facilities have an estimated 3,350 licensed beds, 2,244 residents, and over 3,100 employees from the local communities.
The declaration also mentioned that Omega had already sent Gulf Coast a default notice last July 8, saying that it had applied a portion of its security deposit to the outstanding rent amounts and later asked to pay for over $2.4 million in 10 days.
Omega then issued on Aug. 10 a second default notice and even increased all their rent due, asking for a payment of almost $217 million.
Gulf Coast has a debt of about $376,000 in outstanding rent to the Blue Mountain Landlords, the declaration states.