Pittsfield facility at risk of foreclosure as Peoria-based parent company gets sued for defaulting on loans

Eastside Rehabilitation

PEORIA — Eastside Rehabilitation and Health Care, 1400 E. Washington in Pittsfield, is one of 17 nursing and long-term care facilities in Illinois and Missouri at risk of foreclosure as its Peoria-based parent company, Petersen Health Care, owes nearly $51 million in loans.

WEEK-TV in Peoria reported Monday that, as of early February, all 17 facilities are now under the care of Kansas City-based attorney Michael Flanagan, a court-appointed receiver. He has control over all the assets and most operations of the company.

Court documents filed in January show Maryland-based Capital Funding LLC and X-Caliber Funding LLC made separate claims that Petersen Health Care defaulted on its loans to those companies in December 2023.

Petersen reportedly owes more than $19 million in Housing and Urban Development-backed loans in the suit filed by Capital Funding LLC. The totals are split among eight facilities, with Eastside Rehabilitation and Health Care one of them. The agreement also allows the lender to foreclose on those properties to pay back the outstanding balance.

In the $31 million foreclosure suit filed by X-Caliber Funding, Petersen Health Care claimed it was the victim of a ransomware attack targeting its billing systems for multiple facilities in October 2023, impacting its ability to make loan payments and causing it to fall into default. X-Caliber claimed it wasn’t made aware of the attack until the payments came due.

X-Caliber reported in a later court filing that Petersen was moving money between facilities to keep them afloat.

X-Caliber and Petersen agreed to a $40 million loan in 2019. The remaining balance as of January was just over $31 million. The loan agreement allows the lender to foreclose on those properties to pay back what’s left.

Employees at Eastside Rehabilitation and Health Care shared in May 2022 in an almost $3 million settlement to resolve a U.S. Department of Labor investigation into overtime wages. The settlement involved more than 3,000 employees across the Midwest at 84 Petersen Health Care facilities.

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