Continuing care retirement community (CCRC) Clare Oaks will be getting a new management company and more assisted living units if a new Chapter 11 restructuring plan is approved.
Located in the Chicago suburb of Bartlett, Illinois, Clare Oaks voluntarily filed for Chapter 11 bankruptcy protection in June 2019. Subsequently, Clare Oaks creditors’ committee battled with the bondholders — private equity firm Lapis Advisors and Amundi Pioneer Asset Management — over the future direction of the CCRC.
In July, a federal judge ordered the two parties to re-engage in negotiations with a better spirit of cooperation.
Now, the bondholders and the Clare Oaks committee of unsecured creditors have reached an agreement, and Judge Donald Cassling on Friday ruled that the plan may be put to a vote of the CCRC’s residents and other creditors.
Under terms of the agreement, Clare Oaks would be managed by Evergreen Senior Living Properties LLC, which also operates several other CCRCs that are located in Texas. And, the plan calls for $5 million in deferred capital improvements, including a conversion of 60 skilled nursing units to 32 assisted living units.
Independent living residents would be asked to modify their residency agreements related to when entrance fee refunds are paid, which is meant to prevent similar liquidity crunches in the future, according to the disclosure documents filed in the case. Clare Oaks held an estimated $131 million in total debt prior to restructuring, including $43.4 million in possible resident refund claims and $87 million in secured bond debt. The restructuring would eliminate approximately $40.6 million of the legacy bond debt.
Clare Oaks CEO Gigi Walker would leave her position under the new terms, receiving severance of $150,000 to be paid over the course of six months.
The creditors have until Sept. 21 to vote on the plan.