Bondholders Lapis Advisers LP and Amundi Pioneer Asset Management have filed a Chapter 11 plan of reorganization and disclosure statement for Bartlett, IL-based continuing care retirement community Clare Oaks Senior Living, according to an article published Tuesday by Bankrupt Company News.

The plan requires certain community residents to choose whether they will accept modifications to their residency agreements related to the return of deposits. If they vote in favor of the plan, then Clare Oaks would continue to operate substantially as it did prior to bankruptcy. Otherwise, Clare Oaks’ “assets will be sold and in all probability all claims of current and former residents will be worth $0,” according to the article.

Accepting the plan would mean that a resident would not receive his or her deposit back until after a new resident has occupied the vacated unit and provided Clare Oaks with a new deposit. Currently, the operator has to return deposits after a certain period of time has passed — usually one or two years — regardless of whether it has found a replacement resident.

According to the article, bondholders have filed a motion requesting court approval of the plan’s disclosure to residents, with a voting deadline of July 17.

“This is an alarming development for the retirement community business model, with deposits and residents’ wellbeing/rights to date generally considered sacrosanct, even in the bankruptcy context,” the article stated. “The result of this development will undoubtedly mean that a community’s ability to attract new residents will increasingly depend on the apparent financial health and waiting list of that retirement community.”