Centennial HealthCare Cor-poration, which leases the health and rehabilitation center from a private owner, filed a voluntary petition under Chapter 11 on Dec. 20. Letters announcing the filing began shortly after Jan. 1.
Pinelake Administrator Dawn Ciokan found out about the bankruptcy filing in an e-mail on Dec. 23. She told The Pilot that Pinelake itself has always been profitable and well managed over the 10 years of its existence. Ciokan came to Carthage two years ago, attracted by the quality care she saw at Pinelake.
“We are not the prettiest, but we are pretty near the best,” she told The Pilot. “Our state ratings have been excellent. We were checked in August and had no care issues. We give the best care in the area.”
Ciokan said budget meetings early in December included no mention of any potential bankruptcy filing by the parent corporation.
“The corporation operates 70 some facilities,” Ciokan said. “What pushed them over the edge was cuts in Medicare. This building alone lost over $115,000. They can cut what they want, but we still have to provide the care. That is what we call the Medicare cliff.”
Pinelake has a high percentage of residents on Medicare and Medicaid. Many elderly Moore County family members live there.
“They come mostly from Carthage, Robbins, Sanford — we pull mainly from Central Carolina Hospital,” Ciokan said. “Most of the residents come in under Medicare because they receive a skilled service. We do have a high population on Medicaid.”
But the cuts hurt, and Centennial cited them as a principal cause of the filing.
A number of local businesses were affected and cannot legally be paid money the company owes them until the bankruptcy estate is settled. Even then, the businesses may not get everything they are owed.
Keith Hardware and Sheree’s Flower Shoppe are among the businesses that are owed money from Pinelake.
“I had trouble getting paid,” Leon Keith told The Pilot. “I called them last year and said I was coming up there to move in, and they could call the sheriff if they wanted to.”
Keith said he was put off for awhile, but was paid some money. Then he found himself on the phone again trying to collect.
He said he was told to wait a few days and he would hear something. He said he got a letter that weekend announcing the bankruptcy filing. Under federal law, Keith and other debtors affected are not allowed to take certain actions to collect money.
Creditors like Keith or Sheree’s cannot legally contact Pinelake by telephone, mail, or otherwise even to ask for payment. They are barred from filing lawsuits or repossessing property.
“About all I can do is post this notice on the door of my hardware,” Keith said. “I might do that.”
The town of Carthage has been affected.
“I was shocked,” Town Manager Carol Cleetwood said. “It is the last thing I expected. Pinelake has always been good to work with the community, very accessible. I hope they do a successful job of reorganizing and stay in Carthage.”
The corporation owes the town one month’s water bill, Cleetwood told The Pilot.
It is a big bill, and Carthage needs every penny in the present budget crisis, especially following water revenue losses during last summer’s drought.
The Dec. 20 filing coincided with the billing period; nothing Pinelake owed Carthage as of that date can be paid.
“They are one of our biggest water consumers,” she said.
She said Pinelake still owes the November — December bill. “That is $2843.35 to be exact,” Cleetwood said.
Ciokan is not happy about the situation.
“My company, my parent company has filed for Chapter 11, and I feel bad,” she told The Pilot. “I feel really bad. I feel bad for Keith Hardware, for Sheree. All the vendors received notices from corporate offices. All the families and residents received notices from me.”
Centennial has many sites all over the country, but more in this state than any other.
“They operate, I think they have 70 across the United States,” she said. “North Carolina has the most — managed, leased, or owned — of any state.”
Ciokan had been paying local bills out of a petty cash fund. The company stopped sending that money last summer and said all those bills would henceforward be paid by the central office.
“We used to pay some bills; they used to give us a sum of money, and we paid local bills,” she said. “The last few weeks, some of us were paying out of our own pocket to cover stuff, which seems a little odd, but we figured they hit a rough spot.”
Ciokan vows the residents of nursing home will not be affected.
“No services have been cut at all, nor is there any plan to cut services,” she said. “They have made arrangements with banks for funding to cover the reorganization.”
She does not know how much of the debt included in the bankruptcy estate, essentially any debt outstanding on Dec. 20, will be written off or paid partially.
A letter sent to businesses in Carthage by Centennial HealthCare states the corporation has secured financing from a group of lenders led by Wachovia Securities and Bank of America.
This reorganization loan will make it possible for Pinelake to stay in business, because current bills can be paid.
“For purchase after the filing date, we can and will pay for these purchases in full, in the normal course of business,” the letter says.
Ciokan said there was no question of sale, as the buildings themselves are owned privately and only operated by Centennial under lease. Even if that company folded, another company could, in theory, lease the facility and continue, she told The Pilot.
