Turnaround firm Healthcare Management Partners (HMP), acting as the court-appointed receiver, has closed the sale of substantially all assets pertaining to two Alabama-based senior care facilities (Cullman ALF Group, LLC and Decatur ALF Group, LLC) which were placed in receivership in January of 2018, by the United States District Court for the District of Northern Alabama after actions taken by the indenture trustees.

Working with partners at the Waller law firm, HMP decided to utilize a stalking horse auction, an approach they have become experienced at executing successfully to the benefit of stakeholders, to maximize returns on the sale of the two facilities.  A stalking horse auction involves a purchaser (the stalking horse purchaser) who is willing to publicly submit their bid ahead of a formal auction.  The stalking horse purchaser’s bid effectively establishes a floor for bids and ensures that there will be at least one party who will bid at the auction.  It also enables the seller to market-test the stalking horse purchaser’s initial bid to determine whether higher and better offers can be obtained. 

“The Stalking Horse Auction has proven itself to be one of the most effective tactics for returning funds from distressed or legally challenged facilities to investors,” said Derek Pierce, managing director at HMP who served as the receiver of the facilities. “Utilizing this process as receiver, we’ve built a track record of delivering strong, capable bidders and the best possible results for stakeholders.”

The two stalking horse auctions were conducted simultaneously.  As it has been in the past for similar receiverships, the process was wildly successful in generating increased value for stakeholders. The initial stalking horse bid for both facilities began at $10,300,000. Through the stalking horse process, the final bid for both facilities was $14,500,000, meaning the stalking horse auction delivered $4,200,000 in additional value.

Ultimately, Agemark Acquisition, LLC was the successful bidder for both facilities. The team’s efforts resulted in approximately 22 potential purchasers conducting due diligence on the facilities. 

“After overseeing turnaround operations for the last year, these facilities are well positioned to thrive under its new ownership,” added Pierce. 

In addition to Pierce, the HMP team included Lauren Douglas, Tyler Brasher, Anthony Jordan, and Ward Tishler. The Waller team was led by Ryan Cochran, Blake Roth, and Kristen Larremore. HMP also employed Watson McCollister with Senturian Brokerage LLC as real estate broker and exclusive listing agent to market the facilities.