Bartlett, IL-based Clare Oaks said it plans to honor contractual obligations to its 225 residents, guaranteeing refunds for 90% of the entrance fees, an agreement that is typical of continuing care retirement communities.
Earlier this month, the CCRC’s bondholders, West Coast private equity firm Lapis Advisors, LP, and Boston-based Amundi Pioneer Asset Management proposed a reorganization plan that would delay repayments until after a new resident had occupied the vacated unit and provided Clare Oaks with a new deposit.
“In essence, the bondholders — in an attempt to protect themselves from losses incurred by their own investment strategies — have proposed a plan that would steal from the senior citizens who invested their life savings to avoid burdening their children and society when they needed future care,” Clare Oaks said in a statement.
According to Clare Oaks, in December 2012, bondholders burdened Clare Oaks with bond debt of $89 million. In 2018, the CCRC said it initiated attempts to discuss solutions before filing for bankruptcy, but bondholders chose not to restructure the agreement, leading Clare Oaks to declare bankruptcy last year.
The operator claimed that if the bondholders’ plan is approved, it could have national implications for seniors.
“It will open the door for other investors to abandon the rights of older adults — a possibility that would devastate the security of more than 600,000 older adults who are living in nearly 2,000 CCRCs in the United States,” the firm said.