On Friday, the attorneys for Erickson Retirement Communities LLC and its affiliated debtors announced that it has emerged from bankruptcy after the US Bankruptcy Court for the Northern District of Texas confirmed the debtors’ plan of reorganization and sale to Redwood Capital Investments LLC. The exit from Chapter 11 culminated with Redwood Capital agreeing to purchase all of Erickson’s assets for $365 million after Erickson spent just over six months in the bankruptcy process. The conditions of Redwood Capital’s successful bid required that a consensual plan of reorganization be agreed to by Erickson’s numerous creditors holding in excess of $2 billion of debt no later than April 30, 2010. Erickson’s organization includes 20 continuing-care retirement communities that serve more than 23,000 residents throughout 11 states.
"It’s highly unusual and remarkable that a complex bankruptcy of this scale was completed in such a tight timeframe," said Thomas Califano, vice chair of DLA Piper’s Restructuring practice. "It was essential that this transaction and reorganization be completed in an expeditious manner to preserve the rights of the residents. The only way this would be done was by aggressively driving the process to a result."
"We pursued an aggressive time schedule designed to capitalize on Erickson’s inherent value in the senior living sector and to avoid a deterioration of Erickson’s business. The expedited auction and reorganization allowed the company to preserve value for all stakeholders and protect the residents interest in their living communities," said John Cusack, Vice-chair of DLA Piper’s Finance practice and Chair of its Real Estate Capital Markets Group. "With financing for the purchase and development of new senior living facilities still generally unavailable to its competitors, Erickson under Redwood Capital’s ownership will find itself in a unique position to grow based on several existing sites that are ready for development and expansion."