The US Bankruptcy Court for the Southern District of Iowa ruled last week on a restructuring plan for QHC Facilities LLC and its 10 related nursing homes and assisted living communities, according to court records.

“This settlement agreement is a compromise and settlement by each party of that party’s claims against the other party. It is also a mutual release by the parties.” the court said. “By executing this settlement agreement, each of the parties intends to and does hereby extinguish the obligations heretofore existing between them.”

QHC Facilities, which owns eight skilled nursing facilities and two assisted living communities with a combined capacity for almost 750 residents, filed for bankruptcy in December 2021 and began looking for a buyer early in 2022. The properties include QHC Mitchellville, QHC Winterset North, QHC Winterset South, QHC Madison Square, QHC Fort Dodge Villa, QHC Crestridge, QHC Crestview Acres in Marion, QHC Humboldt North, QHC Humboldt South and QHC Villa Cottages of Fort Dodge. 

A federal bankruptcy court judge approved the sale of QHC and its affiliated communities last March. The sale, however, faltered in June as buyer Cedar Health Group raised questions about quality-of-care issues that could affect the licenses for the facilities, the Iowa Capital Dispatch reported.

As of November, QHC Facilities owed the state of Iowa more than $3.9 million in fines, according to local media. The state attorney general’s office gave up efforts to be among the first in line to be paid when the planned sale price for the chain dropped from $12 million to $4.5 million.

Under the terms of the settlement, QHC will transfer $415,000 of Cedar’s deposit to Cedar’s counsel’s trust account; QHC will retain the remainder of the deposit, totaling $190,000. Any interest that has accrued on the deposit is to be divided pro rata between the parties. As part of the settlement agreement, Cedar agreed Feb. 22 to withdraw its objection to confirmation of the joint plan of liquidation. 

“Confirmation of the plan was the final chapter in the case that was preceded by an almost year-long sale and restructuring process. The plan was made possible through complex negotiations with multiple entities, including the state and federal governments, two secured lenders, the Official Committee of Unsecured Creditors and the United States Trustee,” Legal Desire reported last week. Attorneys for Dentons Davis Brown advised QHC in the matter. They had no comment for the McKnight’s Business Daily.