Petersen Health Care faces foreclosure on nearly $51 million in loans
PEORIA – Two lenders are alleging Petersen Health Care failed to repay a total of nearly $51 million in loans.
Seventeen health care facilities owned by the Peoria-based company are part of the loan foreclosure proceedings in two separate court cases.
Two facilities are in the Peoria area: Timbercreek Rehab & Health Care in Pekin, and Fondulac Rehabilitation & Health Care Center in East Peoria. One facility is in Missouri and the rest are located across Illinois, including in Canton, Galesburg, Kewanee and Monmouth.
The first foreclosure suit was filed Jan. 23 by X-Caliber Funding LLC in the U.S. District Court for the Northern District of Illinois Rockford Division regarding eight care centers in Illinois: El Paso Care Center, Flanagan Rehabilitation & Health Care Center, Courtyard Estates of Kewanee, Courtyard Estates of Knoxville, Courtyard Estates of Monmouth, Legacy Estates of Monmouth, Marigold Rehabilitation & Health Care in Galesburg, and Polo Continental Manor. X-Caliber Funding LLC claims that Petersen Health Care owes more than $31 million.
Those eight care centers were placed in receivership on Jan. 25. Receivership means that Petersen Health Care is no longer running the facilities.
The receiver, Michael F. Flanagan, of Flanagan & Associates in Kansas City, sent a letter to employees which was obtained by the Journal Star. It explained that business will continue as usual under the management of Walnut Creek Management Company, an affiliate of Tutera Senior Living & Health Care, a manager of skilled nursing and senior living facilities in Illinois. The letter also assures employees that they should not have trouble cashing their paychecks, but if they do, to contact their managers.
More: Woodford County health care facility with history of issues fined $75,000 for violations
When asked about the receivership, Petersen Health Care issued the following statement:
“Amid ongoing discussions, one of our lenders took a very aggressive action and placed facilities in El Paso, Flanagan, Kewanee, Knoxville, Monmouth, Galesburg and Polo into receivership. Subsequently, the lender’s management company, Tutera Group, visited these sites without prior notice to assess and manage the care in these facilities.
"Petersen Health Care continues to own the facilities and is cooperating with Tutera to help ensure there is minimal impact on our staff and that our residents continue to receive quality care. No other Petersen Health Care locations are affected by this action and will continue to operate as normal. We are working actively with our lenders and aim to find a solution to return these facilities to our management.
"Inadequate state and federal funding and staffing challenges continue to put pressure on healthcare providers and were significant factors leading to the current situation.”
A second lawsuit against Petersen Health Care by Capital Funding LLC was filed Jan. 31 in the United States District Court for the Northern District of Illinois Eastern Division. It pertains to nine health care facilities: Batavia Rehabilitation & Health Care Center in Batavia; Timbercreek Rehab & Health Care in Pekin; Fondulac Rehabilitation & Health Care Center in East Peoria; Bloomington Rehabilitation & Health Care Center; Sunset Rehabilitation & Health Care Center in Canton; Eastside Rehabilitation & Health Care Center in Pittsfield; Cisne Rehabilitation & Health Care Center in Cisne; Benton Rehabilitation & Health Care Center in Benton; and Ozark Rehabilitation & Health Care Center in Osage, Missouri.
The suit alleges that Petersen Health Care is in default with an outstanding balance of more than $19 million of unpaid Housing and Urban Development loans. Capital Funding, a Maryland-based company, alleges breach of contract and is seeking foreclosure. The loans were set to be paid back Jan. 21, 2024.
More: Fall at East Peoria nursing home partly responsible for man's death. Here's what happened
Another hearing on the request for an emergency receivership is scheduled for Feb. 7 in the courtroom of Judge Thomas M. Dirkin in Chicago.
Petersen Health Care was founded in 1974 and owns nearly 100 senior living facilities in Illinois, Iowa and Missouri. The company is based in Peoria at 830 W. Trailcreek Drive. Mark Petersen is listed as CEO.
This article originally appeared on Journal Star: Peoria-based health care company facing foreclosure on massive loans
