HCR ManorCare filed for a prepackaged Chapter 11 bankruptcy on Sunday, claiming no property but listing up to 200 creditors, assets of up to $10 billion and an equal number of liabilities.
An addendum to the bankruptcy plan filed in U.S. Bankruptcy Court in Wilmington, Del., also states ManorCare’s former CEO, Paul Ormond, will receive $116.7 million owed to him stemming from a deferred compensation agreement he signed in 2011 when the company was bought by the Carlyle Group for $6.3 billion. Mr. Ormond stepped down in September as ManorCare’s president and CEO.
A New York newspaper reported last fall that Mr. Ormond had been demanding $100 million in deferred compensation and indicated that Quality Care likely would be liable for the payment should it gain control of ManorCare.
In addition to the $116.7 million, Mr. Ormond also will receive medical, dental, and vision coverage under his employment agreement, plus he also receives office space, furnishings, and secretarial support services provided by ManorCare — but the accommodations cannot be on company premises.
The actual figures of ManorCare’s assets and debts were not listed in the bankruptcy filings. But the Toledo-based provider of elder-care services — which will be acquired by its landlord, Quality Care Properties of Bethesda, Md., sometime later this fall — listed its landlord as the largest unsecured creditor with a claim of $445.8 million.
A list of holders of secured equity puts Carlyle as the largest holder with 26 million shares. Carlyle still lists HCR ManorCare among its portfolio of investments.
ManorCare plans to make its first appearance before bankruptcy Judge Kevin Gross at 11 a.m. Tuesday in Delaware.
The 175-page bankruptcy plan, which accompanied ManorCare’s voluntary bankruptcy petition, lays out the particulars of how the Toledo company will navigate through Chapter 11 reorganization and eventually become a wholly-owned subsidiary of Quality Care, which currently is a real estate investment trust but will give up that designation once it becomes ManorCare’s owner.
The plan makes no mention of where ManorCare will be located in the future.
ManorCare is one of the nation’s largest operators of nursing homes and assisted-living facilities. Last year it defaulted on its monthly $39 million rent to Quality Care, which eventually initiated receivership proceedings against the Toledo firm that later led to the bankruptcy and acquisition plan.
The bankruptcy had several conditions attached to it.
ManorCare was is not allowed to accept any debtor-in-possession financing, which is a special type of financing for distressed companies and usually accompanies most corporate bankruptcies. Instead, it will be permitted to draw on its $550 million line of credit it received in July from private equity firm Centerbridge Partners.
The plan also provides for a new master lease to be drawn up, and Quality Care will have the power to name the new officers and board of directors of ManorCare. It already has stated Guy Sansone will become the new chief executive officer of the company and Laura Linynsky will become chief financial officer.
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