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Why Are So Many Nursing Homes Filing for Bankruptcy?


With the U.S. population aging, now seems like the perfect time for a boom in the nursing home and long-term care businesses. Nursing homes are not known for cost-cutting, and with large numbers of Americans needing care, nursing home balance sheets should be flush. In Florida, for example, a single room can cost around $90,000 a year.

However, many nursing homes have filed for bankruptcy protection over the past few years. Consider the following:

  • Senior Care Centers, which is Texas’ largest nursing home operator, filed for bankruptcy protection at the end of 2018. The company claimed to be weighed down by $100 million in debt, including over $30 million in unpaid rent.
  • Two nursing homes in Washington state filed for bankruptcy protection in November 2019. The company that ran the nursing homes had around $30 million in debt and an unfavorable lease agreement.
  • Absolut Facilities Management LLC filed for bankruptcy protection in September 2019. It was one of the largest nursing home operators in the country at the time of filing.

These are only some of the more high-profile bankruptcy filings, which have happened around the country.

What is Driving the Bankruptcy Boom?

The nursing home industry might be more vulnerable than many of us imagine. Nursing homes charge so much not because they make enormous profits but because it costs so much to provide skilled care around the clock. Like all businesses, nursing homes can run into cash flow problems, especially if the number of residents falls too low.

However, there may be other reasons in play. A little-known feature of bankruptcy is that it allows some debtors to wipe out certain lawsuit judgments against them. The automatic stay can also halt any legal proceeding, which can provide a company with breathing room. Some nursing homes might be filing for bankruptcy protection to prevent lawsuits related to elder abuse.

This was certainly true of the Country Villa chain of nursing homes, which had 19 facilities in California but filed for bankruptcy protection back in 2014. The company was facing seven class action lawsuits related to how staff treated its residents. The company was broken up and sold in bankruptcy, and the winning bidder was the largest operator of nursing homes in California. He also had many complaints against his homes.

Is Your Business Facing Lawsuits?

The bankruptcy code allows businesses and individuals to discharge certain lawsuit judgments. Though some might argue that this is unfair, Congress explicitly provided for it.

Not every court judgment can be discharged. For example, a court judgment for fraud is rarely discharged. But those related to negligence often can. If your company was accused of negligently hiring or training staff, then you might be able to get rid of the judgment in bankruptcy.

Contact Our Firm Today

When it becomes apparent that you can no longer keep up with debt repayment, it is time to act decisively. Contact the Plantation bankruptcy lawyers at Nowack & Olson to discuss what steps to take next. Our firm offers a free consultation, which you can schedule by calling 888-813-4737.






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