Quality Care Properties (NYSE: QCP) — the real estate investment trust that spun off from HCP Inc. (NYSE: HCP) last year — has started the legal process for transferring its many HCR Manorcare skilled nursing, assisted living, and memory care properties into the control of an independent receiver.

Toledo, Ohio-based ManorCare operates more than 500 skilled nursing facilities (SNFs), assisted living communities, outpatient rehab clinics, memory care communities, and hospice and home health agencies. After being beset by problems for several years, the company earlier in 2017 defaulted on its lease agreements with Bethesda, Maryland-based  QCP, which is the landlord for nearly 300 ManorCare properties. As of June 30, 2017, QCP’s Manorcare Portfolio consisted of about 230 post-acute/skilled nursing assets and roughly 60 assisted living/memory care properties.

Under the lease, ManorCare agreed that QCP would have the right to appoint an independent receiver to operate the facilities in the event of a default, the REIT stated in a press release issued late Thursday. Now, QCP has filed a complaint in California State Court to take this course of action.

“HCR ManorCare has refused QCP’s requests to appoint fully independent directors and officers to oversee the skilled nursing and assisted living/memory care businesses at facilities owned by QCP,” the REIT stated. “Instead, the facilities remain under the control of the incumbent Hcr Manorcare senior executive team and board of directors, who QCP believes are burdened by irreconcilable potential or actual conflicts of interest, including duties to sister companies in the HCR ManorCare group, personal claims against the HCR ManorCare group and potential personal exposure to HCR ManorCare and/or its stakeholders.”

All the ManorCare facilities in question are open, and QCP expects that patient care will not be interrupted by this process and that jobs will be preserved at these sites.

A court-appointed receiver would operate the ManorCare facilities in the QCP portfolio until the properties could be transitioned to new owners and/or operators. Moving forward, the REIT plans to execute a “regionalization strategy” to “offer new investment and new opportunities to local managers,” according to the press release.

Last year, QCP spun off from HCP. Since that time—under the leadership CEO Mark Ordan, a noted turnaround specialist—QCP has weighed several options for stabilizing the ManorCare portfolio, including taking over full equity ownership of the properties.

In June, the New York Post reported that private equity giant Carlyle Group, which has owned ManorCare since 2007, was set to cede control to QCP. However, a deal did not come to pass. In July, QCP announced that ManorCare had defaulted after missing its July rent payments, and that QCP would be within its rights to appoint a receiver or “exercise other remedies.”

Written by Tim Mullaney

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