Dallas, Texas — A federal bankruptcy judge has approved an $80 million loan to keep Genesis HealthCare afloat while the once-dominant skilled nursing chain works toward a roughly $1 billion sale of its assets.
U.S. Bankruptcy Court Judge Stacey Jernigan signed off on the new debtor-in-possession financing last week, allowing Genesis to retire an earlier $30 million bankruptcy loan and cover payroll obligations — including weekly paychecks that average about $30 million across its facilities.
“Each weekly payroll averages approximately $30 million,” Genesis stated in court filings. “The Debtors need additional access to financing to ensure that they have adequate runway to bridge to a closing.”
Why the Extra Cash Was Needed
The original $30 million loan was only intended to carry Genesis through February. But the path to finalizing a sale has taken longer than expected — dragged out by mounting professional fees, administrative costs, and the day-to-day cash swings that come with operating a large multi-state portfolio of skilled nursing facilities.
Jernigan approved the sale of Genesis and approximately 300 subsidiaries back in January to a buyer known as 101 West State Street in a deal valued at about $996 million. The target closing date is sometime before June 30, with a hard court deadline of September 30.
Genesis was quick to point out that the need for fresh financing didn’t reflect struggling operations. “This is not due to the Debtors’ operations, which remain strong,” the company said in its filing.
Better Terms, Bigger Safety Net
The company initially approached JMB Capital Partners Lending for an $80 million facility. But by the time Jernigan heard the case in court Wednesday, Genesis had worked out a refinancing arrangement with its existing group of lenders — which includes Genesis landlords and investors — on improved terms.
Under the final deal, Genesis can draw $80 million immediately for previously approved expenses. The lenders also committed an additional $25 million in reserve, available depending on how the court rules on a separate settlement tied to therapy payment disputes with a Genesis joint venture partner.
The new financing carries a 12% interest rate and other fees, which could reduce the ultimate payout to creditors once the sale closes. Jernigan said she moved ahead because Genesis would soon be “bumping into trouble” without the funds and would face “tough decisions” about who to pay.
One Fee Dispute Left Unresolved
Jernigan didn’t rule on a separate request to pay JMB more than $1 million in fees for its early involvement in organizing the financing. Genesis argued the firm’s participation brought current lenders back to the table and ultimately produced a better deal. But the judge said she was having a “hard time” with the size of the fee and asked for legal precedents before deciding.
Genesis is one of the largest operators to enter bankruptcy in skilled nursing history. Its situation sits within a broader trend of financial strain across the sector — a reality that’s also reshaping how investors and operators think about long-term positioning, as shown by PACS Group’s record-breaking $5.3 billion in revenue heading into 2026 as one of the few expanding players in the market.
Genesis attorney Dan Simon said the company expects to close on the sale by the end of June.
