Senior Care Centers working with JMB Capital on amended exit facility

By Caroline Salls

Pittsburgh, March 18 – Senior Care Centers, LLC provided an update Tuesday on its efforts to achieve the effective date of its confirmed plan of reorganization, according to a status report filed with the U.S. Bankruptcy Court for the Northern District of Texas.

As previously reported, Senior Care Centers announced earlier this month that its proposed exit financing lender pulled out of the financing agreement.

Senior Care said exit lender MidCap Financial Services originally told the company that the exit facility closing would be delayed because of risks related to the coronavirus outbreak, among other factors. MidCap called the delayed closing decision an “internal credit decision.”

However, MidCap later said it was unwilling to proceed with the exit facility and that “nothing could be done to remedy MidCap’s concerns.”

As a result, Senior Care said its Chapter 11 plan is unable to take effect.

In Tuesday’s report, the company said it is attempting to close an amended exit facility, which would be provided by JMB Capital Partners Lending, LLC based on the documents originally negotiated with MidCap.

Senior Care said some changes will need to be made to the exit facility documents, but not its Chapter 11 plan.

Specifically, since MidCap will serve as administrative agent, but JMB will provide the funds, governance changes must be made to clarify who had authority to make decisions regarding the facility because MidCap would be serving as agent only, not as agent and lender.

In addition, Senior Care said the amended facility carries a term of 12 months, which is shorter than under the original MidCap facility, to allow the company to refinance outside of bankruptcy with a traditional ABL lender as quickly as possible.

The company said the amended facility would also require payment of roughly $1 million per-year in additional interest expense, reflecting the bridge nature of the new financing deal.

“The debtors hope to transition from the amended exit facility to a new facility under a replacement lender as quickly as possible to reduce the costs associated with the increased interest rate,” the report said.

In addition to pursuing alternatives for exit financing, Senior Care said it has also continued negotiations with a potential purchaser of the assets of the proposed go-forward operations of the reorganized debtors under the plan, and it believes that “the potential purchaser is in a position to move very quickly and, in the event the various refinancing attempts prove unsuccessful, the debtors could effectuate a relatively quick sale of the operating assets under Bankruptcy Code section 363.”

If an asset sale is unavailable, the company said it would seek an orderly liquidation of the operating assets to new operators.

Senior Care Centers is a Dallas-based skilled nursing and long-term care industry leader in Texas and Louisiana. The company filed bankruptcy on Dec. 4, 2018 under Chapter 11 case number 18-33967.

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