Additional objections have been filed against a Chapter 11 reorganization plan proposed by the majority bondholders for Barlett, IL-based continuing care retirement community Clare Oaks Senior Living.
In addition to an objection that had been filed June 11 by operator and debtor Clare Oaks, four other objections have now been filed against the bondholders plan, including one from the Centers for Medicare & Medicaid Services.
May 15, the CCRC’s bondholders, West Coast distressed debt investor Lapis Advisors, and Boston-based Amundi Pioneer Management, proposed a bankruptcy reorganization plan that would delay resident entrance fee repayments until after a new resident had occupied the vacated unit and provided Clare Oaks with a new deposit. The plan also proposes bringing in a new professional management company to operate the facility. Clare Oaks filed for bankruptcy in 2019, the second time the firm had taken such action.
CMS filed an objection to the bondholders plan on June 12, saying that the plan “fails to provide any information regarding the bondholders intentions concerning the Medicare provider agreement and continued Medicare participation. The agency expressed concerns that all residents in the CCRC’s assisted living, memory care and skilled nursing units would be forced to move out, if the plan was approved.
The U.S. trustee; the Sisters of St. Joseph of the Third Order of St. Francis, which founded the CCRC and of which 22 Clare Oaks residents are members; as well as Clare Oaks’ Committee of Unsecured Creditors, also has filed objections to the plan. In addition, the Committee of Unsecured Creditors also has proposed its own bankruptcy reorganization plan for Clare Oaks, which honors the debtor’s commitments to its residents and families by assuming all residency agreements without modifications and paying all entrance fee refunds owed to current and former residents in full.
The bondholders claim that their plan “repositions Clare Oaks on a solid path of financial stability and future growth,” but Clare Oaks CEO Gigi Walker told McKnight’s Senior Living that she is concerned the bondholders’ proposed plan for growth is unrealistic, particularly in the midst of a pandemic.
“This could really set a huge precedent for the industry, and we really just want to look out for the needs of our seniors, some of whom have been with us since we opened in 2008,” Waler said.
A hearing on both plans is expected to go before the U.S. bankruptcy court from the Northern District of Illinois, Eastern Division, on July 14.