A Texas judge has signed off on a final bankruptcy plan for one of New Mexico’s largest nursing home operators, approving the company’s $1 billion liquidation scheme and allowing plaintiffs with pending settlements and jury awards against the company to receive up to 26% of what they’re owed.
Genesis HealthCare, which operates a third of the nursing home beds in the state, filed for financial restructuring bankruptcy in U.S. Bankruptcy Court for the Northern District of Texas in July 2025. After more than a year of litigation — which attorneys for the company described in court Wednesday as a “tense and hostile process” — the parties struck a deal to sell off Genesis’ properties to Delaware-based 101 W State Street Holdings LLC. Bankruptcy court documents describe the LLC as “a newly-formed affiliate” of California-based NewGen Health.
Genesis facilities, including the company’s 21 nursing homes in New Mexico, are expected to continue operating under the new ownership without any interruptions for patients or employees, Genesis spokesperson Neddie Brennan wrote in an email to The New Mexican.
Judge Stacey Jernigan emphasized the importance of maintaining stability for a company operating facilities with 15,000 residents and 27,000 employees nationwide.
“We can’t ever forget the human beings,” she said during the bankruptcy confirmation hearing Wednesday.
For attorneys who represent New Mexico plaintiffs with personal injury, negligence and wrongful death claims against the company, however, the planned payout still does not feel fair, said attorneys Dusti Harvey and Caela Baker, partners in an Albuquerque-based law firm that specializes in nursing home abuse litigation and has brought dozens of cases against Genesis since its founding 2005.
Injured patients and their families will get more than the original estimate of “pennies on the dollar” — but they’ll still only receive about a quarter on a dollar.
“This has been a long and exhausting process that’s been fraught with a lot of uncertainty for our clients, and while the closing of this bankruptcy proceeding paves the way for our clients to finally receive some measure of compensation, it’s woefully inadequate for the tremendous losses that they and their families have suffered,” Baker said.
History of poor care
The financial restructuring is the latest in a string of challenges for Genesis HealthCare and its facilities in New Mexico.
A December investigation by KFF Health News found Genesis facilities trail national averages in the U.S. Centers for Medicare and Medicaid Services’ five-star rating system, in which five stars represents the best quality of care and one star the worst.
An investigation published by The New Mexican in September found that pattern holds true in New Mexico, too: 33% of Genesis’ facilities in the state received a one-star overall rating from the Centers for Medicare and Medicaid Services. Statewide, 24% of nursing homes received the one-star rating.
One of Genesis’ worst offenders, Santa Fe’s Casa Real, remains unrated by the federal agency “due to a history of serious quality issues,” according to the Centers for Medicare and Medicaid Services’ website. The facility is one of just two nursing homes operating in Santa Fe County, although a third skilled nursing facility, not affiliated with Genesis, is under development in a lot on Galisteo Road.
This is the second time Casa Real has been caught up in a major bankruptcy case: Genesis took over the facility after it’s previous operator, Preferred Care Inc. of Plano, Texas, declared bankruptcy in 2017 due to a flood of personal injury cases.
The poor care has translated to lots of litigation against Genesis HealthCare; a search for personal injury and wrongful death claims filed against the company in New Mexico courts yields hundreds of results.
After Genesis filed for bankruptcy, plaintiffs with unpaid settlements and jury awards, as well as pending lawsuits, became creditors in the case. Essentially, they joined a long line of people waiting to be paid out from the company’s remaining assets.
Confirmation plan
Genesis’ bankruptcy plan — a nearly 300-page document filed with the court and signed by Jernigan — lays out how the company will liquidate its assets and pay creditors.
The plan was a tough one to hammer out, Genesis bankruptcy attorney Daniel Simon said during the hearing Wednesday.
“This case has been pending for 15 months, much longer than the time that we anticipated at the outset. …There have been twists and turns, and peaks and valleys. The success and the administrative solvency has never been guaranteed,” he said.
By Wednesday, Simon said, all of the parties had come to a “fully consensual” resolution.
That includes a plan to pay “unsecured creditors,” a group of hundreds of plaintiffs nationwide who have filed hundreds of millions of dollars in claims against Genesis. More than $200 million in Genesis’ assets will end up in a liquidation trust, said Daniel Desatnik, an attorney representing the committee of unsecured creditors.
Those creditors, he said during the confirmation hearing, “want to know, ‘OK, how do I get that money? What’s that going to look like?’ … For the benefit of the creditors listening today, I just want to say that the core tasks of that trust are reconciling their claims, including settling or liquidating them.”
A board of creditors will have “real oversight authority” over payouts from the trust, Desatnik added: The board will have final approval over the trust budget and distributions. Harvey estimated her clients — who include plaintiffs with pending settlements, as well as those with pending lawsuits filed before and after Genesis filed for bankruptcy — will likely start to see disbursements in the next year or so.
Jernigan called the liquidation trust process “carefully crafted.”
“I think it is a good system,” the judge said.
Plaintiffs’ attorneys respond
Harvey acknowledged the sale is a “milestone” for Genesis and the new operator, and the expected payouts are better than what plaintiffs were previously promised.
But, she added, “It’s a shame that these families have to become bankruptcy creditors to get what they’re owed.”
“For the families we represent, the questions still remain: how much accountability there will be, when they will receive their compensation and whether residents will receive better care with the new company,” Harvey said.
Baker argued Genesis is the latest company to follow a “disturbing” bankruptcy playbook.
Massive healthcare companies come into states like New Mexico and operate under complex corporate structures, funneling money to top executives while squeezing nursing home facilities with tight budgets and minimal staffing, she said.
“They’re letting injuries and deaths happen, and then once the lawsuits become overwhelming, they file for bankruptcy,” Baker said. “We saw it with Genesis. We saw it with Preferred Care before that.”
Margaret O’Hara reports on issues affecting healthy communities in New Mexico. Her work is funded by a grant from Anchorum Health Foundation. Anchorum will not have any role in editorial decisions. The New Mexican and its Public Service Journalism Fund retain full editorial control. Philanthropically funded stories by The New Mexican are made available to all readers without a paywall.
