California-Nevada Methodist Homes (CNMH), a nonprofit that operates two continuing care retirement communities (CCRCs) in the Bay Area of California, has filed for Chapter 11 bankruptcy protection.
California-Nevada Methodist Homes was founded in 1954, and the organization owns and operates an Oakland CCRC called Lake Park and a Pacific Grove CCRC called Forest Hill. Lake Park has 216 units and currently is occupied by 155 residents. Forest Hill has 135 units and currently is home to 70 residents.
“In recent years, CNMH has faced a growing number of financial challenges,” according to bankruptcy court documents. “These challenges have resulted from, among other contributing factors, changing attitudes of seniors towards institutional care, the difficulty that smaller CCRCs like CNMH have in achieving ‘economies of scale’ from purchasing and pricing standpoints, direct competition from nearby communities, and the devastating impact of the COVID-19 pandemic.”
As a result of these challenges, the organization has received permission to draw on the bond reserve fund to make payments on its roughly $33 million bond debt. The organization has total estimated liabilities between $50 million and $70 million, a spokesperson for the organization told SHN. The provider is seeking to restructure the debt and likely will seek a buyer or an affiliation with a larger entity, the San Francisco Business Times reported.
In January 2020, a proposed sale of CNMH to Bay Capital was conditionally approved by California authorities, but the transaction was not completed.
There is scarce public information about the failure of the deal.
“It’s hard to believe the pandemic was not a reason but you’d have to ask the buyer,” bankruptcy attorney Neal Wolf, of Hanson Bridgett, told the San Francisco Business Times.
Bay Capital was described in public documents as an “ownership group [that] has more than $10 billion in assets under management, operates more than 80 senior living communities across 12 U.S. states, includes a global network of innovators to help address many of the issues of aging through technology, and maintains leadership representation on 9 national boards of directors in the senior living industry.”
CNMH joins other CCRC providers that have filed for bankruptcy, as the Covid-19 pandemic exacerbated existing financial challenges.
In Nov. 2020, Henry Ford Village — a 1,038-bed CCRC in Dearborn, Michigan — filed for Chapter 11. In Dec. 2020, a CCRC in suburban Chicago called Park Place of Elmhurst filed for bankruptcy.