A senior living company with 15 communities in seven states is moving ahead with a Chapter 11 bankruptcy plan that would infuse it with needed funds and reduce some of its debt in the process.
American Eagle Delaware Holding Company and its subsidiary Eagle Senior Living this week won confirmation in the U.S. Bankruptcy Court for the District of Delaware to proceed with a plan to restructure its debt and gain more financial flexibility in the process.
The plan includes the sale of two senior living communities, interest rate reductions for Eagle’s bond debt and a reduction of debt by approximately $40 million, and $28 million in new funds by way of exchanging 2018 bonds with newer 2022 bonds, according to David Gordon, a shareholder with Polsinelli, the law firm representing the company in the bankruptcy proceedings.
American Eagle is “going to emerge from Chapter 11 a better, stronger company with a better balance sheet,” he told Senior Housing News.
The $28 million loan funds all of the company’s capital expenditures over the next four years, Gordon added.
Ann Arbor, Michigan-based Eagle Senior Living purchased from Brookdale Senior Living (NYSE: BDK) a portfolio of 16 senior living communities in the tail end of 2018. But by 2020, the company had run into unforeseen challenges related to the Covid-19 pandemic, which caused a decline in occupancy and ultimately resulted in the company defaulting on the terms of its bonds.
“The debtors continue to combat labor shortages and employee retention issues due to, among other things, increased Covid-19 positivity rates among their current employees, vaccine mandates, and competition from other industries for the debtors’ workforce,” reads a court document filed in March as part of the company’s bankruptcy proceedings.
As of December 31, 2021, occupancy for the company’s nearly 1,200-unit portfolio sat at 81.4%.
All that remains to close the Chapter 11 restructuring is reissuing the bonds, something that will be done in June when Eagle closes on the sale of its Vista Lake community in Florida, which was auctioned as part of the bankruptcy proceedings. The company also sold another underperforming community in Florida as part of the bankruptcy auction.
Illuminate Healthcare was the winning bidder for the community. The sale is expected to close in the coming months.