Former HCR ManorCare CEO Paul Ormond is set to receive $116.7 million from the now-bankrupt nursing home giant. In September, Ormond resigned in the midst of speculation that ManorCare would be filing for bankruptcy due to its inability to pay back rent on its 295 skilled nursing and assisted-living facilities. Thanks to recently released bankruptcy documents, it has been revealed that ManorCare is $7.1 billion in debt.
The parcels of land on which ManorCare facilities sit have been leased to them by Quality Care Properties, (QCP) a real estate investment trust, since a deal inked in 2011. Within 14 months of the agreement, ManorCare began having problems paying rent on their properties. The company was able to get by for a time thanks to other businesses within their corporate portfolio, including profitable home health and outpatient rehab divisions. These segments were able to transfer $500 million to the skilled nursing facility area of the business to help cover rent payments, until eventually the company realized they would be better off filing for bankruptcy. At one point last October, ManorCare residents and their loved ones were frightened at the possibility of being evicted from their facilities when the chain waited until the last possible minute to respond to a lawsuit filed against them by QCP. At the eleventh hour, ManorCare submitted a request to extend the deadline to file a response, a motion which was thankfully approved.
ManorCare Debt to be Repaid After CEO Gets $116.7 Million Check
Under the agreement, rent will be still be paid, but the amount will be amended to reflect the amount of cash flow ManorCare has available after other bills and obligations are paid. Any cash they earn above that amount will be given to QCP to cover rent. In the filing, ManorCare states that they believe they can do this until 2025, at which point it is believed that QCP will assume full ownership. As of now, QCP has been granted authority to replace all ManorCare Officers and board members. It is believed Mr. Ormond stepped down in order to avoid a firing. So how can a company who owes $7.1 billion in back rent afford to pay nearly $120 million to a former-CEO who was unable to keep the company afloat?
According to ManorCare’s bankruptcy filing, the lion’s share of the payout comes from a retirement plan and a senior management savings plan. Mr. Ormond was also allowed to keep his health, dental, and vision insurance, secure an offsite office and furniture, as well as administrative support.
Levin & Perconti – A Strong Record Against ManorCare
ManorCare has received so much attention not only due to the large payout to its ex-CEO, but also because they are the second largest nursing home chain. With over 500 total facilities and 34,000 beds, many Americans have a loved one who resides in a ManorCare facility or have at least heard of the chain.
In 2006, the nursing home abuse and neglect attorneys of Levin & Perconti secured the largest nursing home verdict in Illinois history against ManorCare Health Services of Homewood, IL. Our Chicago nursing home abuse and neglect attorneys are highly respected for our commitment to getting the truth and leveraging it to obtain the best result for those who have been a victim of abuse or neglect.
In addition to the 2006 record judgement, have obtained other verdicts and settlements against HCR ManorCare facilities. Understaffing is a major concern in America’s nursing homes, where profits often prove to be more valuable than patient care. If you have a loved one that has experienced abuse or neglect in an HCR ManorCare or other skilled nursing facility, please contact us so that we can help you determine if you have a case. Consultations with our skilled attorneys are free and confidential.
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