Bankrupt Senior Living Facilities: Is the New Operator Worse Than the Previous One?

Managed residential properties in the Vercors (38).

Naturally, this takeover cannot happen without concessions for investors, who will almost invariably have to accept a reduction in rent. However, in order to win the case in court, the various competitors—to secure the support of the co-owners—will seek to ensure that this reduction is as modest as possible, which, in principle, should benefit the investors. But it is not uncommon for the new operator, once they have taken over the property, to comply only very partially with the commitments made in court, particularly regarding rent.

Among the classic excuses cited is the discovery of repairs (the necessity of which is very often questionable) that the co-owners are expected to pay for and of which the new operator was allegedly unaware.

Using this excuse, the operator then stops paying rent or pays only a very small portion of it. The co-owners, who generally view the takeover by a new company as the end of their troubles, are thus often brought back to the harsh reality of this type of investment.

Our advice: band together and do your due diligence on the operator beforehand

Co-owners should band together during the reorganization or bankruptcy proceedings, which, in most cases, result in a candidate taking over the business. After thorough research, the co-owners can lend their support to a specific operator. Those involved in this type of practice generally have a bad reputation, and it is not very difficult to uncover this information with a minimal amount of investigation.