The Clare at Water Tower has filed for bankruptcy protection from creditors after failing to make debt payments, reports Bloomberg, following a September default on municipal bonds used to fund the luxury senior living facility.
Assets and liabilities were each as much as $500 million, the not-for-profit facility reported in its Chapter 11 filing, dated Nov. 14 in U.S. Bankruptcy Court in Chicago. Back in September, the Clare defaulted on bond debt of $229 million after electing to not make a scheduled debt payment that was due the beginning of the month.
The sluggish U.S. economy has caused revenue to fall, says Judy Amiano, CEO of Clare’s developer, Franciscan Sisters of Chicago Service Corp., in the Bloomberg article.
“Prospective senior residents are having difficulty selling their homes and have lost significant amounts of their retirement funds in the financial market, making it difficult, if not impossible, for them to move into or remain in senior housing facilities,” Amiano said in court papers.
Before opening in Dec. 2008, the retirement and health-care facility, for residents above age 62, had deposits for 220 of its 248 independent living units, but as of Nov. 1, only 82 of those units were occupied—an occupancy rate of 33%, court papers revealed.
The 53-story high-rise, located in Chicago’s Gold Coast, was funded by a $229 million municipal bond offering, with the Bank of New York Mellon Corp. as the trustee.
The Clare has a 99-year lease on land owned by Loyola University, which Bloomberg reports as the largest unsecured creditor with $1.54 million in unpaid rent. Other unsecured creditors include the city of Chicago for a development obligation of $453,519 and Greystone Development of Irving, Tex. for a contract claim of $356,200.
The senior living facility seeks court approval to borrow as much as $12 million from Redwood Capital Management LLC while in bankruptcy, according to the filing, says Bloomberg, as the nuns’ spokesperson says it is “dangerously close to running out of working capital.”
Written by Alyssa Gerace