Senior Care Centers: Texas Skilled Nursing Chapter 11 Freefall

Senior Care Centers, LLC, then one of the largest skilled nursing operators in Texas, filed chapter 11 on December 4, 2018 in the U.S. Bankruptcy Court for the Northern District of Texas under lead case 18-33967. The petitions covered 21 jointly administered debtor entities operating 97 skilled nursing facilities, nine assisted-living facilities, and six hospice operations across roughly 13,000 beds in Texas and Louisiana. The case is assigned to Hon. Barbara J. Houser, with Omni Management Group acting as claims and noticing agent.

The filing posture was unusual for a healthcare debtor of this size. The company entered chapter 11 without committed DIP financing, relying instead on cash collateral from its prepetition CIBC Bank USA ABL facility, and used the case primarily to shed and transfer the operating licenses of dozens of facilities to new operators rather than to run a single going-concern 363 sale. Restructuring of the surviving portfolio ultimately moved through a Third Amended Joint Plan co-proposed by the debtors and the Official Committee of Unsecured Creditors, confirmed on December 13, 2019, with an Effective Date that slipped to March 27, 2020 after a failed exit-financing close.

Debtor(s)	Senior Care Centers, LLC (21 jointly administered entities)
Court	U.S. Bankruptcy Court, Northern District of Texas (Dallas Division)
Case Number	18-33967
Petition Date	December 4, 2018
Confirmation Date	December 13, 2019
Effective Date	March 27, 2020
Judge	Hon. Barbara J. Houser
Plan Type	Third Amended Joint Plan of Reorganization (Debtors and UCC as co-proponents)
Cash Collateral	CIBC Bank USA ABL; separate orders for KeyBank Debtors and HUD-backed entities; no DIP facility
Claims Agent	Omni Management Group, Inc.

Sabra, Granite, and LTC Lease Pressure as the Filing Trigger

Senior Care Centers' filing was driven by a cascade of landlord defaults stacked on top of a tightening ABL line. Operating losses had built through 2017, when the company reported approximately $910.4 million in revenue and a net loss of about $94.3 million on its full-year results. By the ten months ended October 31, 2018, revenue had dropped to roughly $697.1 million.

The company carried more than $119 million in annual rent commitments to three landlord groups. Sabra Health Care REIT held leases on approximately 40 facilities at about $58.5 million in annual rent, with $31.78 million in unpaid rent owed at the petition date. Granite Landlords held about 34 facilities at approximately $46.6 million in annual rent, with $4.49 million unpaid. LTC Properties held about 11 facilities at approximately $14 million in annual rent and was current as of the petition. Sabra delivered notices of default in August 2018 and termination notices on August 23, 2018. Granite delivered default and termination notices on November 11, 2018, and LTC issued potential-default notices on November 8, 2018.

CIBC Bank USA, as administrative agent under the ABL, sent the first events-of-default notices in April 2018 and began establishing borrowing-base reserves that materially reduced revolver availability. CIBC followed with additional default notices in October 2018. CIBC default reserves and the Sabra and Granite termination notices remained in place when the chapter 11 petitions were filed on December 4, 2018. Sabra had entered into an agreement to sell its 38-facility portfolio for approximately $385 million to a new buyer and had filed an adversary proceeding seeking a declaratory judgment that its leases had terminated pre-petition — a finding that would have barred the debtor from assuming or rejecting those leases under section 365.

Capital Structure: CIBC Non-HUD and HUD Revolvers and the Sabra/CCP Loan

Funded debt at the petition date was concentrated in two CIBC-led facilities and a small second-lien loan from a Sabra subsidiary. The CIBC ABL "Non-HUD" facility carried a $67.5 million revolving commitment with approximately $33.06 million outstanding at the petition date and a maturity of April 1, 2020, secured by a first-priority lien on substantially all current and future assets. The CIBC syndicate consisted of CIBC Bank USA as administrative agent, CIT Finance LLC, MB Financial Bank, Bankers Trust Company, Wells Fargo Bank, and Compass Bank. A separate CIBC "HUD" revolver commitment of $12.5 million had approximately $9.53 million drawn and supported $2.78 million in unsecured letters of credit.

The second-lien loan was the CCP Finance I LLC facility, made by a Sabra subsidiary in a commitment of up to $20 million with approximately $4.33 million outstanding at petition and a stated maturity of September 1, 2020. The CCP loan asserted a second-priority lien on substantially all assets, putting Sabra in a creditor seat in addition to its dominant landlord position.

Book balance-sheet figures as of October 30, 2018 showed approximately $310.1 million in total assets and $267.9 million in total liabilities, before approximately $283 million of intercompany balances. General unsecured trade debt was estimated at roughly $36.7 million as of the petition date. Equity ownership was concentrated in Silver Star Investments, LLC, which held approximately 68.3% of SCC Parent and was itself approximately 73.5% owned by Granite Investment Group, LLC — the same Granite enterprise that was simultaneously the second-largest landlord across the portfolio.

Cash Collateral Architecture in Lieu of DIP Financing

The debtors did not obtain a traditional DIP facility. Instead, they used a sequenced set of cash collateral orders to fund operations through plan confirmation and beyond. The interim CIBC cash collateral order was entered shortly after the petition and provided CIBC with replacement liens on substantially all assets (subject to a professional-fee carve-out) and superpriority administrative-expense status under sections 364(c)(1), 503(b), and 507(b) on a dollar-for-dollar basis for any diminution in collateral value. The order required weekly budget reporting, weekly telephonic conferences with the lender, and lender access for audit and appraisal work. Termination triggers included case conversion or dismissal, trustee or examiner appointment, unauthorized budget deviation, and the filing of any DIP or sale documents not supported by CIBC.

A separate cash collateral architecture was layered in for the KeyBank Debtors — a subset of the debtor group with leases and security agreements held by KeyBank, N.A. — under an Agreed Final Order entered February 22, 2019 that provided KeyBank with replacement liens (excluding certain avoidance claims), superpriority claims, and continued contractual compliance. A third Agreed Final Order was negotiated in mid-2019 covering Love Funding Corporation's interests in the HUD-backed facilities. The result was a multi-track adequate-protection structure tracking the discrete collateral and lease pools across the debtor group, rather than a single unitary cash-collateral order.

Operations Transfer Agreements Instead of a 363 Auction

Rather than market the full enterprise as a going concern, the debtors used the case to execute facility-level Operations Transfer Agreements, transferring operating licenses, residents, and ancillary assets to incoming operators free and clear of liens under section 363(f). The first wave of OTA motions was filed in late February 2019, including transfers of the "Las Ventanas de Socorro" facility to Socorro Health Care, LLC and groups of facilities to Trisun Care Center entities, Cottonwood Creek Nursing, Windmill Nursing & Rehabilitation, and La Hacienda Nursing. Additional transfers ran through 2019 and into 2020 as the portfolio wound down toward the surviving NewCo footprint.

The OTA structure produced a complex post-confirmation landlord landscape that continued to settle out for years. In August 2021, LTC Properties announced a court-approved settlement covering 11 Texas skilled nursing facilities operated by Senior Care Centers and its affiliate Abri Health Services, transferring those operations to HMG Healthcare with a $3.25 million payment from LTC and a secured working-capital loan to facilitate the transition. Abri itself, the post-emergence successor to a portion of the SCC operating footprint, filed its own chapter 11 in April 2021, roughly a month after the SCC plan went effective.

A discrete equity sale ran in parallel for the hospice business. In February 2020, the debtors filed an expedited motion to sell the equity interests in three Gamble Hospice entities — Gamble Hospice Care Central LLC, Gamble Hospice Care Northeast LLC, and Gamble Hospice Cenla LLC — to Passages, LLC (d/b/a Passages Hospice) for $750,000. H2C Analytics ran the marketing process. Sale orders were entered in late February and amended in early March 2020.

Substantive Consolidation and the Joint Debtor/Committee Plan

The Third Amended Joint Plan of Reorganization was filed on October 16, 2019, with the Official Committee of Unsecured Creditors as a co-proponent. The disclosure statement was approved on October 24, 2019, and the confirmation hearing ran December 4–5, 2019. Judge Houser entered the Confirmation Order on December 13, 2019.

The plan consolidated the subsidiary debtors with Senior Care Centers, LLC for plan purposes, restructured the surviving operating footprint into a reorganized "NewCo," and routed legacy liabilities and litigation claims to an Unsecured Creditor Trust capitalized with the "OldCo" assets. Funding sources for the plan included an Exit Facility sized to retire the CIBC ABL claims in cash on the Effective Date, cash on hand, Harden Escrow proceeds, and an Unsecured Creditor Trust Note. The substantive consolidation feature drew objections from TXMS Real Estate Investments, Inc., affiliated CHI Javelin entities, and other landlord-aligned objectors, and produced multiple discovery motions and motions in limine through August and September 2019. Following confirmation, Accountable Healthcare Staffing Inc. and Michael Brandley sought direct certification to the Fifth Circuit, which the debtors opposed.

Class treatment was structured as follows:

The Unsecured Creditor Trust, established on the Effective Date, holds preserved causes of action and trust assets for distribution to holders of Allowed General Unsecured Claims under Class 5. The plan vested the Trust with 80% of the reorganized company's new common stock and a $10 million Unsecured Creditor Trust Note, along with estate causes of action against officers and directors. Alan D. Halperin was appointed Unsecured Creditor Trustee. The plan documents do not state a fixed projected recovery percentage for Class 5; recoveries depend on Trust litigation and reconciliation outcomes.

MidCap Exit-Financing Failure and the JMB Term Loan Workaround

The plan was scheduled to go effective on March 3, 2020 with MidCap Financial Services as the committed Exit Facility lender. MidCap failed to close on the Effective Date. The Committee and the debtors responded with a March 16, 2020 motion for leave to amend the plan to (i) preserve causes of action against MidCap and related parties tied to the "Exit Financing Events," (ii) establish a Professional Fee Escrow Account funded to address approximately $8.5 million in aggregate unpaid professional-fee claims, and (iii) substitute a $1 million JMB Term Loan as a stripped-down replacement exit facility, repayable from first proceeds of OldCo Assets. The court granted leave on March 26, 2020, and the plan went effective on March 27, 2020.

FTI Consulting, which had served as Committee financial advisor through confirmation, was appointed by the court to oversee the Professional Fee Escrow Account at a flat $10,000 per month, reviewing and approving payments from the escrow. Total professional fees through the Effective Date exceeded $17.6 million across the major engagements: Polsinelli at approximately $7.6 million for debtor counsel, Greenberg Traurig at approximately $4.8 million for Committee counsel, BDO at approximately $2.7 million for debtor financial advisor, FTI at approximately $2.1 million for Committee financial advisor, and the Patient Care Ombudsman engagement (Dr. Martin I. Kalish and Nelson Mullins as PCO counsel) at approximately $1.1 million combined.

CHOW Hold, Beazley Insurance, and Other Contested Matters

Once OTA transfers began closing, the Texas Health & Human Services Commission and several Managed Care Organizations placed "CHOW Hold" — Change of Ownership — holds on Medicaid receivables flowing to the debtors. By February 10, 2020, the holds had blocked recovery of approximately $7.3 million in outstanding Medicaid receivables. The debtors and CIBC filed a joint motion to compel HHSC and the MCOs to release the funds, and an Agreed Order was entered February 18, 2020 providing a structured, facility-by-facility release tied to completion of resident trust fund and credit-balance refund reconciliation.

Personal-injury, medical-malpractice, and wrongful-death exposure was addressed through a parallel ADR procedure. The debtors carried approximately $100,000 deductibles per occurrence on their primary insurance and were facing approximately 93 prepetition tort matters. The court approved the claims-resolution procedures in August 2019, channeling the matters into mandatory mediation before any return to litigation.

A separate post-confirmation dispute concerned the company's October 2018 malware incident. Reorganized SCC engaged Baker & Hostetler as breach counsel and RSM US as forensics, and later sought to compel the Beazley Group at Lloyd's (Syndicate 2623/623) to turn over approximately $400,000 in cyber-policy proceeds — roughly $316,440 in legal and forensics fees and approximately $69,000 in direct data-recovery expenses — under a motion filed August 19, 2020 and noticed for September 30, 2020.

Other post-confirmation matters included an Omnicare administrative-expense claim filed in March 2020, a Guest Care Management LLC order-to-show-cause motion that drew a long related-filings tail in early 2020, and a motion for relief from stay filed by KKR Debt Investment regarding setoff rights. The TXMS Real Estate Investments litigation continued post-confirmation as well, ultimately producing reported decisions on the scope of bankruptcy court jurisdiction over lease-related adversary proceedings tied to the SCC plan.

Unsecured Creditor Trust and Halperin Trustee Litigation

The Unsecured Creditor Trust has remained active long past confirmation. Trustee Alan D. Halperin's claims-reconciliation work has processed more than 500 claims through six omnibus objections and expunged 325 claims for missing tax identification numbers. The Trustee has prosecuted two fraudulent-transfer adversary proceedings in the U.S. District Court for the Northern District of Texas and has continued litigating recovery actions against the former Granite-side equity ownership chain. In a March 2026 ruling in Halperin v. Granite Master Partners LP et al., the district court granted in part and denied in part a motion to dismiss, allowing the Trust's recovery action against the surviving defendants to proceed while dismissing claims against deceased defendants for lack of subject-matter jurisdiction.

The Trust was originally scheduled to expire on March 27, 2025. After an initial extension granted in 2025, the Trustee filed a further motion on January 13, 2026 to extend the Trust term to March 2027. Judge Houser entered the order extending the Trust term through March 31, 2027 on February 12, 2026, citing pending litigation, ongoing claims work, and remaining distribution activity.

A separate strand of post-confirmation litigation went directly at the Granite ownership chain. In December 2020, Senior Care's junior creditors filed suit against the company's former private-equity owner and certain landlord parties, citing pre-petition transfers and fiduciary-duty allegations. SCC's former president, Mark McKenzie, was named in related complaints alleging breach of fiduciary duty and fraudulent transfers tied to the years preceding the bankruptcy.

Key Timeline

Frequently Asked Questions

What kind of chapter 11 was Senior Care Centers?

It was a freefall filing without committed DIP financing, run on cash collateral from a CIBC Bank USA ABL facility and resolved through a Third Amended Joint Plan co-proposed by the debtors and the Official Committee of Unsecured Creditors. Asset disposition occurred primarily through facility-level Operations Transfer Agreements rather than a single 363 auction.

Why did the case take so long to go effective after confirmation?

The plan was confirmed on December 13, 2019 with a scheduled Effective Date of March 3, 2020, but MidCap Financial Services failed to close the committed Exit Facility. The plan was amended on March 26, 2020 to substitute a $1 million JMB Term Loan, preserve causes of action tied to the exit-financing failure, and establish a Professional Fee Escrow. The Effective Date occurred on March 27, 2020.

Who is the claims agent for Senior Care Centers?

Omni Management Group, Inc. serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

Is the case still active?

The reorganization is fully effective and the operating footprint has been wound down or transitioned to other operators. The Unsecured Creditor Trust under Trustee Alan D. Halperin remains active through at least March 31, 2027 under an order entered February 12, 2026, with ongoing fraudulent-transfer litigation including Halperin v. Granite Master Partners LP et al.

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