Bankruptcy breeds opportunity

After an exceptionally busy month for Texas M&A (details included in the upcoming issue of The SeniorCare Investor), we have one more. Highland Capital Management’s Cornerstone Healthcare Group was the stalking horse and ultimate buyer of a bankrupt not-for-profit senior care company with two senior living communities in Texas and one in Tennessee. The target, UGHS Senior Living, was actually profitable but filed for Chapter 11 bankruptcy protection in November 2015 after its not-for-profit parent University General Health System filed for bankruptcy protection in February 2015 and its creditors were seeking repayment through various UGHS subsidiaries, including UGHS Senior Living. The three properties included a 79-unit independent/assisted living community in Pearland, Texas, a 62-unit assisted living/memory care community in Port Lavaca, Texas, and an 84-unit senior living community (with IL, AL and MC) in East Knoxville, Tennessee. All of the communities had underlying HUD debt, which was originally arranged by Lancaster Pollard and transferred to Cornerstone. Duff & Phelps Securities was the exclusive sell-side investment banker on the sale.