Democratic Lawmakers Call for Probe of Genesis Bankruptcy Sale

Democratic lawmakers called on a Dallas bankruptcy court to appoint an independent examiner to investigate nursing home giant Genesis Healthcare Inc.'s selection of an insider to buy its assets. The corporate structures of all entities that made bids and the potential impact an existing investor's winning bid may have on unsecured creditors should be investigated, Sen. Elizabeth Warren (D-Mass.), Sen. Richard Blumenthal (D-Conn.), and Rep. Maggie Goodlander (D-N.H.) said in a brief Monday in the US Bankruptcy Court for the Northern District of Texas.

"The conduct of bankruptcy proceedings not only should be right but must seem right," they said. "Here, things do not seem right, and Debtors and related parties have been unwilling to provide the information needed to ensure that company insiders are not abusing the bankruptcy system."

The brief comes after an entity affiliated with private equity firm Pinta Capital Partners was selected on Dec. 1 to buy most of the assets of Genesis, one of the largest nursing home operators in the US. Pinta was co-founded by health-care entrepreneur Joel Landau. The buyer, an affiliate of ReGen Healthcare LLC, was already an investor in Pennsylvania-based Genesis.

The filing highlighted concerns that company insiders may be trying to exploit the bankruptcy process to cut the company's debts by selling it to themselves at a reduced price.

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