Bankruptcies, like many bad things, come in threes—at least that’s how it’s been lately for some Chicago-area continuing care retirement communities established by religious orders which have appeared in bankruptcy court three times in the past two months, most recently on Monday, Dec. 5.
This time, it’s Clare Oaks, a Bartlett, Ill., CCRC founded by the Sisters of St. Joseph of the Third Order of St. Francis. Clare Oaks filed for Chapter 11 bankruptcy protection to restructure its debt, according to documents filed at the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division.
The community, which opened in 2007 , plans to restructure its debt with the help of Paul Rundell, a certified insolvency restructuring advisor and certified turnaround professional.
The reason for the voluntary bankruptcy filing stems from the company failing to negotiate an out-of-court restructuring with its pre-bankruptcy secured lenders, Rundell said in the filing.
“Senior living facilities have experienced substantial declines in occupancy as a result of market changes,” said Rundell in court papers. “Because of these challenging market conditions, [Clare Oaks] has experienced lower than anticipated revenue and a slower than anticipated fill up of the Clare Oaks Campus, which has caused the Debtor to default under its bond obligations.”
As of Dec. 4, the CCRC’s independent living units were 87% occupied; assisted living and memory care units were 100% occupied; and skilled nursing units were 81% occupied.
The company’s assets as of June 30 were listed at $107.2 million, with a debt of $136.9 million, and a recorded revenue of $19 million for the fiscal year that ended on that date. The community is managed by an affiliate of Life Care Services LLC, and will continue to operate, according to a statement by Michael Hovde Jr., the president of the non-profit’s board.
In November, The Franciscan Sisters of Chicago Service Corporation (FSCSC) filed for bankruptcy protection on a luxury senior living facility located in Chicago, Ill., after defaulting on bond debt, citing a sluggish economy that caused revenue to fall. Later in the month, an Ohio CCRC belonging to an operating division of the FSCSC also filed for bankruptcy protection after suffering “substantial declines in sales and occupancy” due to the struggling economy.
Written by Alyssa Gerace