HCR ManorCare post-bankruptcy plans, including CEO, announced by Quality Care Properties
Guy Sansone is expected to be the new CEO of HCR ManorCare once the dust settles from a Chapter 11 bankruptcy filing that happened Sunday. Quality Care Properties outlined plans Friday as the REIT announced an agreement that would give it ownership of the beleaguered operator.
The move, which includes more than 500 assisted living, memory care, skilled nursing and rehabilitation, outpatient rehabilitation clinics, hospice and home care businesses, “is expected to recapitalize HCR ManorCare and provide stability and flexibility to better react to today's rapidly changing post-acute care industry,” QCP said in a press release.
“We see this as the best available opportunity to improve a challenging situation,” QCP CEO Mark Ordan said in a statement. “We considered every possible option and determined that entering this agreement to take direct ownership of our tenant best positions QCP to reposition the business to realize the potential of its properties for QCP shareholders.”
Who is Guy Sansone, expected to be the next CEO of HCR ManorCare?
According to global professional services firm Alvarez & Marsal, where he is a managing director and chairman of the Healthcare Industry Group, Sansone has more than 25 years of experience as an adviser, investor and senior manager of “troubled and underperforming” companies. He founded A&M's Healthcare Industry Group in 2004; there, he and more than 100 others develop long-term strategic plans for investor-owned and not-for-profit healthcare organizations.
During his time at A&M, Sansone was chief restructuring officer and board member of Erickson Living and also has advised Sunrise Senior Living and Brandywine Senior Living, among several other organizations.
On Friday, A&M's website listed Sansone as CEO of the Visiting Nurse Service of New York. He also formerly was interim president of LifeCell, according to A&M, and he has additional experience outside of the firm in the telecommunications, distribution, shipping, drilling, real estate and financial services industries.
Sansone earned his undergraduate degree from State University of New York at Albany.
The plan must be approved by the bankruptcy court. QCP said that approval is expected during the second quarter, with the transaction expected to be completed during the third quarter.
ManorCare issued a brief statement to McKnight's Senior Living: “HCR ManorCare believes this agreement should ensure the necessary financial stability going forward to protect our employees, patients and partners and keep our three profitable lines of business viable going forward.” The company referred all other inquiries to QCP representatives, who declined to comment beyond the press release.
Bethesda, MD-based QCP first announced its intent to file for receivership of Toledo, OH-based ManorCare in August, saying that the operator had defaulted on its rent obligations. In September, ManorCare CEO Paul Ormond stepped down and was replaced by Steve Cavanaugh, who had been the company's executive vice president and chief operating officer.
Over the ensuing months, QCP extended the deadline for ManorCare to respond to its receivership complaint several times and also reduced the company's rent payment. In a January regulatory filing, QCP said that ManorCare owed more than $300 million in back rent.
Concurrent with the signing of the plan sponsor agreement, QCP said Friday, ManorCare paid $23.5 million in rent to QCP, representing the $14 million and $9.5 million payments previously due Jan. 25 and Feb. 10, respectively. QCP said the agreement calls for ManorCare to make additional rent payments during the Chapter 11 period.
Sansone, a managing director and chairman of the Healthcare Industry Group at global professional services firm Alvarez & Marsal, and Laura Linynsky, QCP's senior vice president and a former chief operating officer of Sunrise Senior Living, have been named as consultants on behalf of QCP to help ensure a smooth transition of leadership and ownership, QCP said.
The prepackaged bankruptcy plan agreed to by both companies called for HCR ManorCare, Inc., the parent holding company for the HCR ManorCare operating businesses, to file for bankruptcy voluntarily, which it did Sunday in U.S. Bankruptcy Court in the District of Delaware. As written in the plan, QCP said Friday, HCR ManorCare subsidiaries were not to be part of the filing, and their operations were not to be affected.
Linynsky is expected to serve as HCR ManorCare's interim chief financial officer once the transaction is complete.
Changes for QCP, too
Also at the closing of the transaction, if approved as written, QCP's claims against HCR ManorCare under the master lease and guaranty, including the deferred rent obligation and unpaid rent, will be exchanged and released for 100% equity ownership of HCR ManorCare, with HCR ManorCare becoming a wholly owned indirect subsidiary of QCP.
QCP said that it expects to no longer qualify for status as a REIT after the transaction. The actively managed real estate company said it currently has properties in 29 states, including 257 post-acute/skilled nursing facilities, 61 memory care/assisted living communities, a surgical hospital and a medical office building.