August 11, 2022 – The Debtors filed a motion to extend (for a first time) the period during which the Debtors have an exclusive right to file a Chapter 11 Plan through and including February 8, 2023 [Docket No. 534]. Absent the requested relief, the Plan filing period is scheduled to expire on August 12, 2022. The lengthy extra time is needed to allow for an adversary proceeding ("inextricably tied to the Plan" as discussed just below) which is not expected to begin until December 12th. For the time being, the Debtors have not asked for an extension of their exclusive solicitation period.
Case Status
On April 14, 2022, Northwest Senior Housing Corporation, doing business as Edgemere, and one affiliated Debtor (“Northwest Senior Housing” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Northern District of Texas, lead case number 22-30659. At filing, the Debtors, who operate a luxury senior living retirement community, noted estimated assets between $100.0mn and $500.0mn; and estimated liabilities between $100.0mn and $500.0mn.
On the Petition date, the Debtors also filed a complaint (Northwest Senior Housing Corporation v. Intercity Investment Properties, Inc. et al, Adv. No. 22-03040 (MLV)), with the Debtors alleging in that Adversary Proceeding that Landlord/Defendants Intercity Investment Properties "have engaged in unprecedented and unlawful activities attempting to destroy Edgemere’s business."
The Debtors filed the initial versions of their Chapter 11 Plan of Reorganization and Disclosure Statement on August 3rd [Docket Nos. 508 and 509, respectively].
The Extension Motion
The extension motion states, “The Debtors have made substantial progress toward the goals that they set out to achieve through the filing of these Chapter 11 Cases. At the first day hearings, the Debtors, through counsel, represented their goals: (i) obtain legal relief against Intercity Investment Properties, Inc. (the ‘Landlord’); and (ii) restructure the Debtors’ existing bond debt. In the Adversary Proceeding, Debtor Northwest Senior Housing Corporation (‘Edgemere’) asserts claims against the Landlord that significantly impact the Chapter 11 Cases. Indeed, the resolution of the claims asserted in the Adversary Proceeding is a key component of the restructuring agreement upon which the Plan is premised. Because disputes between the Debtors and the Landlord are inextricably tied to the Plan, resolution of such disputes will also limit, if not eliminate, contested confirmation issues relating to the Plan.
Under the Scheduling Order, the Adversary Proceeding is set for trial in December 2022. The Debtors believe the Adversary Proceeding can and should be decided before the Debtors proceed to confirmation on the Plan. Addressing the issues in the Adversary Proceeding before confirmation will promote judicial economy, conserve estate resources, and assist the parties in efforts to consensually resolve certain confirmation disputes.
Accordingly, the Debtors request an extension of 180 days of the Debtors’ exclusive period for obtaining acceptances of and confirming the Debtors’ Plan. This extension to February 8, 2023 will provide the parties with addition time to complete the litigation in the Adversary Proceeding and incorporate the Court’s rulings into the Plan, to the extent necessary.”
Landlord Action
On April 14, 2022, the Debtor filed a complaint against Intercity Investment Properties, Inc., and Kong Capital, LLC. The Complaint explains: “Since 1999, Edgemere has owned and operated a continuing care retirement community (the ‘Community’ known as a ‘CCRC’) in the Dallas metropolitan area.
Over the course of the last several months, Defendants have engaged in unprecedented and unlawful activities attempting to destroy Edgemere’s business. Despite being under a non-disclosure agreement with Edgemere, and in possession of Edgemere’s confidential information, Defendants directly contacted the press, Edgemere’s residents and Texas regulators without notice to Edgemere, all for the singular purpose of trying to manufacture an improper basis to terminate Intercity’s 52-year ground lease with Edgemere and wrongfully retake the property on which the Community sits – all so that they can repurpose it to make a windfall profit.
Defendants’ combined efforts would not only destroy Edgemere’s business, but also directly endanger the well-being of the more than 400 senior citizens that depend on Edgemere to provide both a safe place to live and certain health care services. Defendants’ actions would result in the loss of the significant entrance fee deposits paid by residents to become part of the Community, the loss of their homes, and the loss of the health care services upon which they rely. Defendants’ unlawful conduct has significantly damaged Edgemere’s business and the Community, and Edgemere is entitled to significant compensatory and exemplary (including punitive) damages as well as equitable relief to ensure Edgemere’s continued operations without Defendants’ interference.”
About the Debtors
According to the Debtors: “Edgemere opened its doors in 2001, and immediately set a new standard for luxury senior living retirement communities in North Texas. It was the first Life Care community to land in Dallas and, for almost a generation now, it’s offered residents an unparalleled set of benefits.
Edgemere’s drive to deliver a top-tier experience is reflective of our vision for excellence in senior living. It’s a vision shared across all 15 members of the Lifespace Communities® family. Together, our missions remain focused on one thing — celebrating the lives of seniors in everything we do. This simple notion has led Lifespace and its multistate system of senior living communities to experience decades of success and financial stability and, even more importantly, earn the trust of thousands of team members, residents and their families.
Additionally, Edgemere’s status as a 501(c)(3) not-for-profit organization means all revenues are reinvested into the community. This not only fuels the development of better services, amenities and opportunities for our residents, but also ensures that in the event of a financial hardship that’s no fault of your own, you won’t be asked to leave the community."
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