November 2, 2022 – Trustee and Plan Sponsor UMB Bank, N.A. ("UMB") * filed a bidding procedures motion requesting (i) approval of bidding procedures in relation to the sale of substantially all of the Debtors’ assets, (ii) authority to enter into stalking horse arrangements with Bay 9 Holdings LLC or its designee (the “Stalking Horse Bidder,” $48.5mn cash), including bidder protections (see below) and (iii) approval of a proposed auction/sale timetable culminating in an auction on December 28, 2022 and a sale hearing on January 10, 2023 [Docket No. 755]. The Stalking Horse Bidder’s APA is attached as Exhibit 2 to the motion and lists the address of Lapis Advisors (specializing in "stressed and special situation investing in both the municipal and corporate arenas") for notices to be sent to the Purchaser. Also listed as a contact is attorney Adrienne K. Walker who has previously represented Lapis Advisors in the acquisition of healthcare assets being sold in bankruptcy (eg Clare Oaks).
*UMB is acting in its capacity as successor bond trustee and master trustee for the Original Bonds (together, the “Trustee”) and in its capacity as a lender under the DIP Credit Agreement (the “DIP Lender,” and together with the Trustee, the “Plan Sponsors”).
A hearing on the motion is scheduled for November 30, 2022.
In respect of resident agreements, the "Stalking Horse APA contemplates that the Debtors will reject all Residency Agreements, and the Stalking Horse Bidder will offer all Current Residents at the Edgemere Community the option to enter into a new monthly rental agreement which shall provide similar services to each Current Resident as offered by the Debtors prior to Closing, at the then current private pay rate as advertised by the Debtors, subject to ordinary market adjustments."
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.”
On June 23rd, the Court issued a final order authorizing the Debtors to access the $8.1mn balance of what is in total $10.1mn DIP financing being provided by UMB Bank, with the Debtor having received access to a first $2.0mn tranche on April 20th.
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].
On November 2, 2022, the Debtors and the Committee (the “Plan Proponents”) [Docket Nos. 750 and 751] and Trustee and the DIP Lender (the “Plan Sponsors”) [Docket Nos. 752 and 753] filed a Chapter 11 Plan of Reorganization and related Disclosure Statement.
Bidding Procedures Motion
The motion [Docket No. 755] states, “The Plan proposed by the Plan Sponsors represents the best possible path to maximizing the value of the Debtors’ assets for the benefit of all stakeholders. The Plan will ensure the ongoing viability of the Edgemere Community such that it can successfully operate for the remainder of the Ground Lease term and meet Resident expectations with respect to quality of service and care. To accomplish this goal, the Plan will implement the Sale Transaction, pursuant to which substantially all of the Debtors’ assets will be sold to a Purchaser (the ‘Purchased Assets’) and remaining assets of the Estates will be transferred to a Litigation Trust to be liquidated for the benefit of, and distributed to, creditors. The Plan Sponsors have selected an initial Purchaser, Bay 9 Holdings LLC or its designee (the ‘Stalking Horse Bidder’) as a starting point towards maximizing the value of the Debtors’ estates. The Stalking Horse Bidder’s offer will be subject to higher and better bids, including through a potential auction, pursuant to the bidding and sale procedures substantially in the form attached to the Proposed Order as Exhibit 1 (the ‘Bidding Procedures’). The Plan Sponsors and the Stalking Horse Bidder have negotiated the terms of an Asset Purchase Agreement, a copy of which is attached to the Proposed Order as Exhibit 2 (the ‘Stalking Horse APA’). The Plan Sponsors believe that the Stalking Horse APA represents the fair market value for the Purchased Assets. Nevertheless, the Plan Sponsors are hopeful that there will be an auction which may result in overbids, and therefore even more value to the Debtors’ estates.
The Plan Sponsors submit that the best test of the value of the Debtors’ assets is to determine what the market will bear through an open sale process. By approving the designation of the Stalking Horse Bidder and the sale process described herein and in the Bidding Procedures, this Court will ensure that the value of the Debtors’ assets will be maximized and market-tested.
… In recognition of the fact that the Debtors’ postpetition financing matures on December 31, 2022 and that it is imperative that a plan of reorganization is consummated as quickly as possible, the Debtors and the Plan Sponsors, with this Court’s blessing, agreed to a plan confirmation timeline that serves as the framework for the sale timeline. The sale timeline has been designed to ensure adequate time for a marketing process while preserving and maximizing the value of the Debtors’ estates for the benefit of all stakeholders, including the Residents.”
Key Terms of Stalking Horse Agreement
- Seller: Northwest Senior Housing Corporation
- Purchaser: Bay 9 Holdings LLC, a Delaware limited liability company.
- Purchase Price: $48.5mn cash
- Bid Protections: A break-up fee of $1,455,000.00 (the “Break Up Fee”) (representing approximately 3% of the transaction value under the Stalking Horse APA) and an expense reimbursement not to exceed $200,000.00 (the “Expense Reimbursement, and collectively with the Break Up Fee, the “Bid Protections”).
Proposed Key Dates
- Bid Deadline: December 27, 2022
- Auction (if necessary): December 28, 2022
- Deadline to Object to the Plan and the Sale: January 3, 2023
- Confirmation and Sale Hearing: January 10, 2023
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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The post Northwest Senior Housing Corporation – Trustee and Plan Sponsor UMB Bank Seeks Approval of Bidding Procedures and Stalking Horse Arrangements with Bay 9 Holdings LLC (an Affiliate of Lapis Advisors, $48.5mn Cash Bid); Aims for January 10th Sale Hearing appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.