After months of intrigue, and allegations of insider dealings, a little-known company emerged Tuesday with a successful bid to buy Genesis HealthCare, one of the nation’s largest and most troubled nursing home chains, with 49 facilities across New England, including two in Western Massachusetts.
The new company, 101 West State Street, LLC, bid just under $1 billion for Genesis, which operates 175 nursing homes across 18 states. Genesis filed for bankruptcy last July under a barrage of lawsuits claiming negligent care.
The sale must still be approved by Chief Judge Stacey G. C. Jernigan, a Texas bankruptcy judge, who has scheduled a hearing for Jan. 20.
If approved, the deal would allow hundreds of families who accused Genesis facilities of negligent care that harmed patients or resulted in their death to recoup about 30 percent of what they say is owed to them.
“It shouldn’t have to take public outcry from all across the country to stop private equity from abusing seniors and then trying to escape the consequences,” Massachusetts Senator Elizabeth Warren said in a statement.
“The results of the auction today look like a better deal for victims, but in the long run, it’s clear that we must keep working to root out corporate greed from health care altogether.”
Jernigan last month rejected results from a November auction of Genesis, after describing that secretive process as “unfair.” In that auction, Genesis essentially sold the chain to itself and allowed just one company to bid against it. It also effectively wiped out the availability of any money to be paid to the hundreds of people who filed lawsuits against the company. Then, Genesis initially would not release transcripts of the shrouded proceedings.
Jernigan’s rejection of that sale followed an unusual two-day hearing, which involved petitions from Warren and colleagues, and the Department of Justice, to scuttle that deal, as well as allegations that the private-equity owner of Genesis, Joel Landau, threatened a competing bidder for his company.
Jernigan ordered a new auction, which was conducted Tuesday, with representatives from the US Trustees Office, an arm of the Justice Department, monitoring the process.
John A. Anthony, a Florida attorney who represents 345 plaintiffs, mostly families or estates of patients who were injured or who died, including some in Massachusetts and Rhode Island, hailed the results of the new auction. His clients’ claims against Genesis total more than $390 million.
“When we began this process, our calculations showed that our clients would recover approximately nothing, based upon the deal then on the table,” he said of the months-long bankruptcy process.
Now, he said, if the judge approves the winning bid, his clients would stand to receive a total of about $117 million.
“We continue to be encouraged as this process heads back to the courthouse for approval,” he said.
In the November auction, a company called Genie 3 Partners LLC, ultimately bid against Genesis owner Landau’s insider contender. Genie 3’s bid was valued at about $20 million more than Landau’s insider venture, known as CPE 88988. But Genesis picked Landau’s company.
In the latest auction, Genie 3 bid again, but lost out to 101 West State Street because Genie’s bid was valued at about $5 million less, according to court documents. Genie 3 was named the backup bidder, should 101 West State Street not be able to complete the deal.
The documents noted that after five rounds of bidding, 101 West State Street’s bid drove up the value of the final results by more than $100 million.
Representatives from Genesis and 101 West State Street, LLC did not return calls seeking comment Wednesday.
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