Stockholders get nothing in plan OK'd for Genesis

Bankruptcy judge lets nursing home firm keep its management

September 13, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

Genesis Health Ventures Inc., the largest nursing home operator in Maryland, announced yesterday that a U.S. Bankruptcy Court in Delaware had approved its reorganization plan giving company stockholders nothing.

The reorganization plan approved by Judge Judith H. Wizmer gives 93 percent of the stock in the reorganized company to senior secured creditors, Genesis Health Ventures said.

Vendors and other unsecured creditors will get 7 percent of the stock, as well as warrants to purchase an additional 11 percent, the company said.

The reorganization plan, which was filed in June, keeps senior management in place and does not call for layoffs or closing of nursing homes, the company said.

The plan also combines Genesis with another nursing home chain, Multicare AMC Inc. Genesis owned 43.6 percent of Multicare before the bankruptcy filing, the company said.

With headquarters in Kennett Square, Pa., Genesis has nearly 6,000 employees in Maryland. It owns and operates about 30 nursing homes in the state and does contracting with about 20 others.

The company also is the parent of NeighborCare, the pharmacy and medical equipment chain based in Baltimore.

The more than 300 Genesis nursing homes have remained in operation since the company filed for Chapter 11 reorganization in June 2000, although a few - none in Maryland - were sold to raise cash.

Genesis was one of five large national chains - including Integrated Health Services of Sparks - that filed for bankruptcy in 1999 and 2000, after Medicare cut its payments.

The new Medicare rates, which went into effect in most nursing homes at the beginning of 1999, dropped Genesis' average reimbursement per day from $386 to $286.

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