Wilmington, DE-based Eagle Senior Living has initiated a voluntary Chapter 11 process in the U.S. Bankruptcy Court for the District of Delaware in a move the company hopes will strengthen its financial structure and provide flexibility to make necessary capital improvements.
Eagle Senior Living’s parent company, American Eagle Lifecare Corp., and management company, Greenbrier Senior Living, are not included in the filing. Greenbrier continues to manage all communities.
The pre-arranged filing will allow Eagle to operate without interruption and “achieve a more balanced and sustainable capital structure, creating a stronger foundation for their communities’ long-term success,” according to a press release issued Friday by American Eagle Delaware Holding Co.
“Although never ideal, in limited instances, a bankruptcy of a senior living and care community may be ultimately beneficial for the community, its residents and constituents,” attorney George Mesires, co-leader of Faegre Drinker’s Senior Living & Care team, told the McKnight’s Business Daily. “A pre-negotiated bankruptcy case, where a broad group of constituents carefully negotiate the terms of a restructuring before a filing, are typically much smoother than a free-fall Chapter 11, which can significantly destroy value and cause uncertainty among the constituents.”
Todd Topliff, president of American Eagle Delaware Holdings, said that the company has been working “diligently” with bondholders “to navigate the impacts of the COVID-19 pandemic, strengthen our long-term financial health and best position Eagle Senior Living to continue providing high-quality care and amenities to all residents.”
In a pre-negotiated bankruptcy case, Mesires said, creditors often voluntarily agree to write off debt to ease the burden on the community and to provide liquidity for working capital or capital expenditure needs.
“Pre-negotiated cases can signal to the market that a bankruptcy case is widely supported and will be minimally disruptive to the community and its most important constituency, the residents,” he said.