SOURCE–The second-largest U.S. nursing home operator, HCR ManorCare Inc, filed for Chapter 11 protection late Sunday with $7.1 billion of debt as part of a pre-arranged deal to transfer ownership to its landlord Quality Care Properties Inc (QCP.N).
Toledo, Ohio-based ManorCare, which operates skilled nursing, assisted living and memory care locations across the United States, had been battling with its landlord over unpaid rents since last year.
In a bankruptcy filing in Delaware, privately-owned ManorCare said revenues have failed to cover monthly rent obligations since 2012, a year after the master lease was signed. The lease covers 289 facilities.
It blamed shrinking margins at its post-acute and skilled nursing facilities on reduced government reimbursement rates, low occupancy, a shift toward new managed Medicare plans and alternative services such as home health care and retirement communities.
ManorCare said it owed $446 million in rent that was accruing at a minimum of $39.5 million every month.