May 23, 2022 – Christian Care Centers, Inc. ("CCCI") and Christian Care Centers Foundation, Inc. ("Foundation" and together with CCCI, the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Northern District of Texas, lead case number 22-80000 (Judge Stacey G. Jernigan). The Debtors, a non-profit, faith-based organization that operates three communities in the Dallas/Fort Worth Metroplex, are represented by Buffey E. Klein of Husch Blackwell LLP. Further board-authorized engagements include: (i) Houlihan Lokey Capital, Inc. (“Houlihan”) as financial advisors, (ii) Mark Shapiro of B. Riley Advisory Services as Chief Restructuring Officer and (iii) Epiq Corporate Restructuring as claims agent.
The Debtors’ lead petition notes between 1,000 and 5,000 creditors; estimated assets between $50.0mn and $100.0mn; and estimated liabilities between $50.0mn and $100.0mn.
In a press release announcing the filing, the Debtors noted they had "identified a purchaser for the communities that is committed to maintaining a high standard of care and services for residents and their families. Boncrest Resource Group, a mission-driven, nonprofit charitable organization based in Atlanta, is lined up to assume operation of the three communities. The organization plans to honor all resident contracts, protect residents' deposits and entrance fees, and, with the company's existing employees, continue providing high-quality care and services.
The acquisition will resolve the financial uncertainty for CCC&S that the COVID-19 pandemic exacerbated. As part of the process, CCC&S has secured debtor-in-possession financing to fund the communities through the bankruptcy cases.
Asset Sale and Stalking Horse Selection
The Shapiro Declaration Provides: "Prior to filing the Chapter 11 Cases, the Debtors conducted a thorough marketing effort to explore the sale of their assets, individually and collectively, and have negotiated an asset purchase agreement with North Texas Benevolent Holdings, LLC ('Stalking Horse') which will serve as a stalking horse baseline bid in a proposed §363 bankruptcy sale ('Stalking Horse APA'). Under the Stalking Horse APA, the aggregate purchase price for the purchased assets shall be…$44,250,000…which includes the assumption of certain assumed liabilities and a credit to Buyer of Seven Hundred Fifty Thousand Dollars ($750,000). Additionally, the Stalking Horse will receive certain bid protections, which include a break-up fee of 3% of the purchase price set forth in the Stalking Horse APA plus actual expenses not to exceed $350,000."
The Stalking Horse is an affiliate of Atlanta, Georgia-based Boncrest Resource Group.
Events Leading to the Chapter 11 Filing
In a declaration in support of first day filings (the “Shapiro” Declaration), Mark Shapiro, the Debtors’ Chief Restructuing Officer provides: “…the Debtors began experiencing financial difficulties in 2018 and 2019 that were exacerbated when the COVID-19 pandemic came to the United States and Texas in early 2020. Further, due to their financial difficulties, the Debtors did not, and have not, had the funds necessary to complete necessary capital expenditures. For example, CCCI had several different plans to upgrade dated portions of its facilities and to address other deferred maintenance issues. As a result, the Debtors entered into the forbearance agreements described above.
The COVID-19 pandemic caused a significant decline in the CCCI campus census. Residents and their families were concerned that COVID-19 would spread rapidly across the Campuses and were concerned regarding the health risks that COVID-19 would cause, particularly in light of the constituency of CCCI’s residents. Increased care requirements for the residents over the course of the COVID-19 pandemic significantly impacted CCCI operating costs, in particular, increasing labor costs and a placing a greater reliance on higher-cost labor agency services. Market forces limited the ability to raise revenues from resident rent to match these increased liabilities. Decreases in fundraising contributions also meant donations were not sufficient to defray the shortfall."
About the Debtors
According to the Debtors: “Christian Care Communities & Services is a non-profit, faith-based organization that operates three communities in the Dallas/Fort Worth Metroplex. For more than 70 years, CCC&S has provided quality housing and health care services for seniors in North Texas.
CCC&S was founded on April 4, 1947, under 'Home for the Aged' in Gunter, Texas. As a ministry to retired Church of Christ ministers, the old Gunter Bible College housed the first elder residents, cared for by donations from individuals and churches. Neighbors from the area donated in-kind contributions, such as cows, pigs, garden produce, and other necessities to support the residents. Later known as Hilltop Haven, it was one of the first nursing communities in Texas to be certified for Alzheimer’s care. CCC&S provides services to seniors regardless of race, color, creed, religion, or national origin.
The Declaration adds: "CCCI was incorporated in 1947 as a nonprofit Texas corporation. The Foundation was incorporated in 1994 also as a nonprofit Texas corporation. The Debtors are not-for-profit, non-stock corporations governed by independent Boards of Directors. There is no separate member of CCCI or the Foundation. CCCI, a faith-based organization, operates three senior living housing and health care campuses in the Dallas / Fort Worth Metroplex. These campuses are located at: (1) 560 Prestige Circle, Allen, Texas; (2) 5100 Randol Mill Road, Fort Worth, Texas; and (3) 900 Wiggins Parkway, Mesquite, Texas (the 'Campuses').
In total, CCCI has 760 units at its Campuses comprised of 412 independent living units, 152 assisted living units, 77 memory care units and 119 skilled nursing units."
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The post Christian Care Centers, Inc. – Operator of Three Dallas/Fort Worth Retirement Communities Files for Bankruptcy Citing COVID Pandemic, Atlanta-Based Boncrest Resource Group to Serve as Stalking Horse ($44.25mnBid) in Section 363 Auction/Sale Process appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.