Shep Roylance and John Sherman of Sherman & Roylance recently handled the bankruptcy sale of a 121-bed skilled nursing facility in Hayward, California. The facility operated well, with 91% occupancy and a 10% operating margin on $19.06 million of revenues. However, on August 23, 2022, the California Superior Court in Alameda County entered a final judgment in favor of 10 current or former residents of the facility totaling approximately $14 million in damages, attorneys’ fees and costs. The owner, Mariner Health Central, Inc., strongly disagreed with the judgment and appealed the decision, but it filed for Chapter 11 bankruptcy protection to maintain uninterrupted care at the facility.
Through an expedited 30-day process, the Sherman & Roylance team managed the selection of qualified bidders for the bankruptcy proceedings, working with owner/operators, debtors committee council, creditors committee council, and the Federal Bankruptcy Court. As part of the deal, they negotiated a new triple-net lease with a new landlord. Spyglass Healthcare, LLC ended up as the buyer of the operations, paying $1.85 million.
