February 5, 2019, Alex Spanko, Skilled Nursing News - More than 20 skilled nursing facilities operated by Welcov Healthcare are now under the control of new operators, court documents filed Monday show. The chain reached an agreement to formally transfer oversight of 22 SNFs in Minnesota, Wyoming, Iowa, and South Dakota to new operators.
Lighthouse Management Group, Inc., a Brighton, Minn.-based consulting firm that specializes in corporate turnarounds, will administer the remainder of Welcov’s operations, including accounts receivable, remnant assets, and causes of action, among others.
The move comes after three creditors — Medline Industries, Healthcare Services Group, and Monida Healthcare Staffing Solutions — last month filed an involuntary Chapter 7 bankruptcy petition against the Edina, Minn.-based Welcov, which owes a total of $17.5 million to a variety of vendors.
That initial filing came about two weeks after Welcov president Tom Boerboom told a local newspaper at the beginning of January that the company was in the process of “winding down operations“; the company had faced a November 2018 lawsuit from Monida Healthcare over $152,000 in unpaid bills.
In an emergency joint petition filed January 29, both Welcov and the creditors asked the judge to approve the settlement and dismiss the involuntary bankruptcy petition in order to prevent disruptions to the safety and care of the more than 1,300 residents at Welcov’s properties.
“Welcov does not have the financial resources to continue to operate the facilities after February 1,” the parties wrote in the filing, submitted to U.S. Bankruptcy Court for the District of Minnesota, Minneapolis Division. “Approximately 1,360 residents live in the facilities and depend on Welcov for critical health care services, food, and other basic necessities of life. If the facilities do not transition to new operators capable of providing these basic necessities on February 1, the residents will likely not receive them.”
Lighthouse vice president Patrick Finn, who signed the agreement on behalf of his company, confirmed to Skilled Nursing News that Lighthouse had assumed control of the remainder of the assets, but declined further comment.
As recently as 2017, Welcov operated 50 properties across the Midwest and Mountain West, a number that had dwindled by the time Boerboom made his comments to The Torrington Telegram of Torrington, Wy. Last spring, the Spearfish, S.D.-based Lantis Enterprises took back control of more than 24 nursing homes that it had sub-leased to Welcov.
As part of the transfer, the court dismissed the bankruptcy action against Welcov.
“Welcov is insolvent and no longer able to continue as a going concern and wishes to engage in an orderly transfer of the facilities and dissolution of its business and financial affairs for the benefit of its creditors, the residents, and all parties in interest in order to maximize the value of its assets and return to its creditors and ensure the continued health, safety, and welfare of the residents,” the multi-party agreement read.