13D Filing: Brigade Capital and Kindred Healthcare Inc (KND)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act
of 1934

(Amendment No. 2)*

KINDRED HEALTHCARE, INC.

(Name of Issuer)

Common Stock, $0.25 par value per
share

(Title of Class of Securities)

494580103

(CUSIP Number)

Aaron Michael Daniels, Esq.

Brigade Capital Management, LP

399 Park Ave, 16^th Floor

New York, NY 10022

(212) 745-9700

with a copy to:

Steven E. Siesser, Esq.

Lawrence M. Rolnick, Esq.

Lowenstein Sandler LLP

1251 Avenue of the Americas, 17th Floor

New York, New York 10020

(212) 204-8688

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

March 8, 2018

(Date of Event which Requires Filing of this
Statement)

If the filing
person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and
is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be
sent.

The information required on the remainder of this cover page
shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”)
or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).

*Based on a total of 91,413,775 shares of Common
Stock outstanding as of January 31, 2018, as set forth in the Issuer’s most recent Form 10-K filed March 1, 2018. Includes 3,531,735
shares of Common Stock owned by Brigade Leveraged Capital Structures Fund Ltd. (“LCS”), 510,571 shares of Common Stock
owned by Brigade Distressed Value Master Fund Ltd., 72,000 shares of Common Stock owned by Brigade Cavalry Fund Ltd. and 1,100,000
shares of Common Stock issuable to LCS upon the exercise of the call options described in Item 5 of the Schedule 13D (as defined
below).

*Based on a total of 91,413,775 shares of Common
Stock outstanding as of January 31, 2018, as set forth in the Issuer’s most recent Form 10-K filed March 1, 2018. Includes 3,531,735
shares of Common Stock owned by Brigade Leveraged Capital Structures Fund Ltd. (“LCS”), 510,571 shares of Common Stock
owned by Brigade Distressed Value Master Fund Ltd., 72,000 shares of Common Stock owned by Brigade Cavalry Fund Ltd. and 1,100,000
shares of Common Stock issuable to LCS upon the exercise of the call options described in Item 5 of the Schedule 13D (as defined
below).

CUSIP No. 494580103

*Based on a total of 91,413,775 shares of Common
Stock outstanding as of January 31, 2018, as set forth in the Issuer’s most recent Form 10-K filed March 1, 2018. Includes 3,531,735
shares of Common Stock owned by Brigade Leveraged Capital Structures Fund Ltd. (“LCS”), 510,571 shares of Common Stock
owned by Brigade Distressed Value Master Fund Ltd., 72,000 shares of Common Stock owned by Brigade Cavalry Fund Ltd. and 1,100,000
shares of Common Stock issuable to LCS upon the exercise of the call options described in Item 5 of the Schedule 13D (as defined
below).

CUSIP No. 494580103

*Based on a total of 91,413,775 shares of Common
Stock outstanding as of January 31, 2018, as set forth in the Issuer’s most recent Form 10-K filed March 1, 2018. Includes 3,531,735
shares of Common Stock owned by Brigade Leveraged Capital Structures Fund Ltd. (“LCS”), 510,571 shares of Common Stock
owned by Brigade Distressed Value Master Fund Ltd., 72,000 shares of Common Stock owned by Brigade Cavalry Fund Ltd. and 1,100,000
shares of Common Stock issuable to LCS upon the exercise of the call options described in Item 5 of the Schedule 13D (as defined
below).

CUSIP No. 494580103

CUSIP No. 494580103

*Based on a total of 91,413,775 shares of Common
Stock outstanding as of January 31, 2018, as set forth in the Issuer’s most recent Form 10-K filed March 1, 2018. Includes 3,531,735
shares of Common Stock owned by Brigade Leveraged Capital Structures Fund Ltd. (“LCS”), 510,571 shares of Common Stock
owned by Brigade Distressed Value Master Fund Ltd., 72,000 shares of Common Stock owned by Brigade Cavalry Fund Ltd. and 1,100,000
shares of Common Stock issuable to LCS upon the exercise of the call options described in Item 5 of the Schedule 13D (as defined
below).

CUSIP No. 494580103

*Based on a total of 91,413,775 shares of Common
Stock outstanding as of January 31, 2018, as set forth in the Issuer’s most recent Form 10-K filed March 1, 2018. Includes 3,531,735
shares of Common Stock owned by Brigade Leveraged Capital Structures Fund Ltd. (“LCS”), 510,571 shares of Common Stock
owned by Brigade Distressed Value Master Fund Ltd., 72,000 shares of Common Stock owned by Brigade Cavalry Fund Ltd. and 1,100,000
shares of Common Stock issuable to LCS upon the exercise of the call options described in Item 5 of the Schedule 13D (as defined
below).

Explanatory Note

This Amendment No. 2 (“Amendment
No. 2”) relates to the common stock, par value $0.25 per share (the “Common Stock”), of Kindred Healthcare, Inc.
(the “Issuer”). This Amendment amends and supplements the Statement on Schedule 13D filed with the Securities and Exchange
Commission (the “SEC”) on December 27, 2017 (the “initial Schedule 13D”), as amended and supplemented by Amendment
No. 1, filed February 1, 2018 (“Amendment No. 1”). The initial Schedule 13D, as amended and supplemented by Amendment
No. 1 and this Amendment No. 2, is referred to herein as the “Schedule 13D.” Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to such terms in the Schedule 13D. Except as otherwise provided herein, each Item
of the Schedule 13D remains unchanged.

Item 3. Source and Amount of Funds
or Other Consideration

Item 3 of the Schedule 13D is hereby
amended by adding the following:

EQTY used approximately $217,800 (excluding
brokerage commissions) of the working capital of EQTY to purchase the shares of Common Stock reported in this Amendment.

Item 4. Purpose of Transaction

Item 4 of the Schedule 13D is hereby
amended by adding the following after the sixth paragraph thereof:

For many of the same reasons outlined
in the Letter, on March 8, 2018, LCS, EQTY and DSTR (the “Brigade Funds”) filed a shareholder action (the “Action”)
against the Issuer’s Board and certain other parties in the Delaware Court of Chancery alleging breach of fiduciary duty
and related causes of action. Contemporaneously therewith, the Brigade Funds filed a Motion for Expedited Proceedings. The Action
seeks to preliminarily and permanently enjoin the proposed acquisition of the Issuer by the Consortium. The Brigade Funds intend
to vigorously prosecute the Action to protect their investors from the consequences of the Board’s breach of fiduciary duties if
the Merger is allowed to close.

Item 5. Interest in Securities of
the Issuer

Item 5 of the Schedule 13D is hereby
amended by deleting it in its entirety and substituting the following in lieu thereof:

(a) As of the Filing Date, Brigade beneficially
owns 4,114,306 shares of Common Stock (excluding the shares of Common Stock subject to the Listed Equity Call Option and the 2018
OTC Equity Call Option, as defined below), of which 3,531,735 shares of Common Stock are owned by LCS, 510,571 shares of Common
Stock are owned by DSTR and 72,000 shares of Common Stock are owned by EQTY.

On November 6, 2017, LCS entered into
a call option agreement (the “Listed Equity Call Option Agreement”) with Credit Suisse pursuant to which LCS acquired
a call option that gives LCS the right to purchase 500,000 shares of Common Stock for an exercise price of $7.50 per share (the
“Listed Equity Call Option”). The Listed Equity Call Option will expire and terminate on May 18, 2018, and is exercisable
at LCS’s election any time on or prior to its expiration.

In January, 2018, LCS entered into a
series of call option agreements (collectively, the “2018 OTC Equity Call Option Agreement”) with Nomura Securities International
Inc. pursuant to which LCS acquired call options that give LCS the right to purchase up to 600,000 shares of Common Stock in the
aggregate at an exercise price of $7.50 per share (the “2018 OTC Equity Call Option”). The 2018 OTC Equity Call Option
will expire and terminate on May 18, 2018, and is exercisable at LCS’s election any time on or prior to its expiration.

Together with the shares of Common Stock
subject to the Listed Equity Call Option and 2018 OTC Equity Call Option, the Reporting Persons are therefore deemed to beneficially
own 5,214,306 shares of Common Stock in the aggregate, 4,631,735 shares of Common Stock by LCS, 510,571 shares of Common Stock
by DSTR and 72,000 shares of Common Stock by EQTY, representing approximately 5.70% in the aggregate, and 5.07%, 0.56% and 0.08%
by LCS, DSTR and EQTY, respectively, of the issued and outstanding shares of the Common Stock of the Issuer as of January 31, 2018,
as set forth in the Issuer’s most recent Form 10-K filed March 1, 2018.

(b) Brigade, as the investment manager
of LCS, DSTR and EQTY, has the shared power to vote and dispose of the 5,214,306 shares of Common Stock described in the Amendment.

(c) Schedule I annexed hereto lists
all transactions in the securities of the Issuer by the Reporting Persons since February 1, 2018, the filing date of Amendment
1. All such transactions were effected in the open market. Except as described in this Amendment, during the period from February
1, 2018 through and including March 8, 2018, there were no other purchases or sales of Common Stock, or securities convertible
into or exchangeable for Common Stock, by the Reporting Persons or any person or entity for which the Reporting Persons possess
voting or dispositive control over the securities thereof.

(d) To the knowledge of the Reporting
Persons, no other person named or incorporated by reference in Item 2 of the Schedule 13D has the right to receive or the power
to direct the receipt of dividends from, or the proceeds from the sale of, shares of Common Stock.

(e) Not applicable.

Item 6. Contracts, Arrangements,
Understandings or Relationships with Respect to Securities of the Issuer

The disclosure in Item 5 relating to
the Listed Equity Call Option Agreement and 2018 OTC Equity Call Option Agreement is incorporated into this Item 6 by reference.

Except as set forth herein, there are
no contracts, arrangements, understandings or relationships between the Reporting Persons and any other person with respect to
the Common Stock.

Item 7. Material to be Filed as Exhibits

Exhibit A: Joint Filing Agreement, dated
as of March 9, 2018

Signature

After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this statement is true, complete and correct.

Exhibit A

AGREEMENT

In accordance with Rule 13d-1(k) under the Securities Exchange Act
of 1934, as amended, the persons named below agree to the joint filing on behalf of them of a statement on Schedule 13D (including
amendments thereto) with respect to the shares of common stock, $0.25 par value per share, of Kindred Healthcare Inc., a Delaware
corporation, and further agree that this Joint Filing Agreement be included as Exhibit A to such amendment number 2 to Schedule
13D. In evidence thereof, the undersigned hereby execute this agreement as of March 9, 2018.

Schedule I

Transactions in Common Stock
by Reporting Persons

The following
table sets forth all transactions in the Common Stock effected since February 1, 2018, the filing date of Amendment No. 1, by the
Reporting Persons. All such transactions were effected in the open market through brokers and the price per share is net of commissions.