Peoria-based health care company faces foreclosure on huge loan

Peoria-based health care company faces foreclosure on huge loan

PEORIA — Two lenders have accused Petersen Health Care of failing to repay loans totaling nearly $51 million.

Seventeen medical facilities owned by the Peoria-based company are part of loan foreclosure proceedings in two separate court cases.

There are two facilities in the Peoria area: Timbercreek Rehabilitation and Wellness Center in Pekin and Fondulac Rehabilitation and Wellness Center in East Peoria. One of the facilities is located in Missouri, and the remaining facilities are located throughout Illinois, including Canton, Galesburg, Kewaunee and Monmouth.

The first foreclosure lawsuit was filed on January 23 by X-Caliber Funding LLC in the Rockford Division of the Northern District of Illinois and involves eight nursing centers in Illinois: El Paso Care Center, Flanagan Rehabilitation and Wellness Center , Courtyard Estates of Kewanee, Courtyard Estates of Knoxville, Courtyard Estates of Monmouth, Legacy Estates of Monmouth, Marigold Rehabilitation & Health Care in Galesburg and Polo Continental Manor. X-Caliber Funding LLC claims Petersen Health Care owes more than $31 million.

The eight care centers were taken over on January 25. The receivership means Petersen Health Care no longer operates the facilities.

The Star-Telegram obtained a letter addressed to employees at Flanagan & Associates in Kansas City from Michael F. Flanagan. It explained that business will continue as usual under the management of Walnut Creek Management Company, an affiliate of Tutera Senior Living & Health Care, a management company for skilled nursing and senior living facilities in Illinois. The letter also reassures employees that they will not have difficulty cashing their paychecks, but to contact their managers if they do.

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When asked about receivership, Petersen Health Care issued the following statement:

“During ongoing discussions, one of our lenders has taken very positive action to place El Paso, Flanagan, Kewaunee, Knoxville, Monmouth, Galesburg and Baltic The facilities were placed into receivership. The lender’s management company, Tutera Group, subsequently visited the sites without prior notice to assess and manage care in the facilities.

“Petersen Health Care continues to own these facilities and is working with Tutera to help ensure the impact on our staff is minimized and that our residents continue to receive quality care. No other Petersen Health Care locations are affected by this action and will continue to Operations are as usual. We are actively working with our lenders to find a solution to return these facilities to our management.

“Insufficient state and federal funding and staffing challenges continue to put pressure on health care providers and are significant factors in the current situation.”

Capital Funding LLC filed a second lawsuit against Petersen Health Care on January 31 in the U.S. District Court for the Eastern District of Illinois, Northern District. It involves nine health care facilities: Batavia Rehabilitation and Healthcare Center in Batavia; Timbercreek Rehabilitation and Healthcare Center in Pekin; Fondulac Rehabilitation and Healthcare Center in East Peoria; Bloomington Rehabilitation and Healthcare Center ; Sunset Rehabilitation and Healthcare Center in Canton; Eastside Rehabilitation and Healthcare Center in Pittsfield; Cisne Rehabilitation and Healthcare Center in Cisne; Benton Rehabilitation and Healthcare Center in Benton; and Ozark Rehabilitation and Healthcare Center in Osage, Missouri.

The lawsuit alleges that Petersen Health Care was in default and had an outstanding Housing and Urban Development loan balance of more than $19 million. Maryland-based Capital Funding claims a breach of contract and is seeking foreclosure. The loans are scheduled to be repaid on January 21, 2024.

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Another hearing in the case is scheduled for 9:30 a.m. Feb. 5 in Chicago Judge Thomas M. Dirkin’s courtroom.

Founded in 1974, Petersen Health Care operates nearly 100 senior living facilities in Illinois, Iowa and Missouri. The company is headquartered in Peoria at 830 W. Trailcreek Drive. Mark Petersen is listed as CEO.

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