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Stalking horse bidder wins majority of Petersen nursing home properties at $116 million price

Petersen Health Care
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Petersen Health Care

A Delaware limited liability corporation placed the winning $116.2 million bid for all but five of Petersen Health Care's nursing homes posted up for auction Tuesday.

That's a fraction of the $215 to $305 million the Peoria-based company's extensive portfolio of nursing homes across Illinois, Iowa, and Missouri are reportedly worth.

The winning bidder, Petersen Acqisitions LLC, was incorporated on June 26 in Delaware —the same day Petersen Health Care's holding company filed paperwork with the bankruptcy court designating that LLC as the stalking horse bidder in the upcoming auction, with an initial $118 million bid.

Generally, a stalking horse bidder puts in a bid pre-arranged with the bankrupt company meant to stave off lowball bids in the upcoming bankruptcy auction. The stalking horse bidder usually receives perks, like expense reimbursements and breakup fees, in exchange.

It's unclear who is behind Petersen Acquisitions. Delaware law afford a great deal of privacy to LLC owners, including shielding their names from the public eye.

The successful bidders for the five other properties were:

  • HC Developers - $14.5 million for Courtyard Estates of Canton, Courtyard Estates of Sullivan, and Legacy Estates of Monmouth
  • Bank of Farmington - $2.8 million credit bid for Courtyard Estates of Farmington plus $309,806 cash.
  • Hickory Point Bank & Trust - $1.8 million credit bid for Courtyard Estates of Girard plus $209,346 cash

One of Petersen's lenders, GMF Petersen Note, LLC, objected to the sale process. They claim there were "significant defects" in the process yielding the stalking horse bid, and say they doubt it was the best and highest available bid. Lender X-Caliber Funding also objected, saying the winning bids are far below the valuations provided by Petersen and fail to recoup what's owed to them.

The company is estimated to owe at least $295 million to its lenders. Petersen's unsecured creditors have received granted court permission to issue subpoenas to take a closer look at financial transfers between the nursing homes, owner and CEO Mark B. Petersen, and Petersen's other companies.

A sale hearing before U.S. Bankruptcy Judge Thomas Horan is set for July 10.

Tim is the News Director at WCBU Peoria Public Radio.