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Amsterdam House Continuing Care Retirement Community, Inc. (2023) – $80mn Reduction in Bond Debt and $59mn Capital Injection at Emergence from Bankruptcy in September 2021 Not Enough to Save Luxury Port Washington, NY Retirement Community

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[Just filed. Developing story.] March 22, 2023 – Amsterdam House Continuing Care Retirement Community, Inc. (d/b/a as “The Amsterdam at Harborside,” “AHCCRC” or the “Debtor”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Eastern District of New York, lead case No. 23-70989 (Judge Alan S. Trust). The Debtor, "a best-in-class senior living community which is situated on approximately 8.9 acres in Port Washington, New York and is dedicated to giving its residents an enriching lifestyle," is represented by Gregory M. Juell of DLA Piper LLP. Further Board authorized appointments include: (i) Ankura Consulting Group LLC as financial advisors (and supplying a CRO), (ii) Grandbridge Real Estate Capital LLC as real estate broker and (iii) Epic Corporate Restructuring as claims agent.

The Debtor's petition notes between 1,000 and 5,000 creditors; estimated assets between $100.0mn and $500.0mn; and estimated liabilities between $100.0mn and $500.0mn. Each of the Debtor's 30 largest unsecured creditors are residents with claims relating to their entrance fee deposits ranging from $835k to $1.16mn. 

This is the Debtor's 3rd trip through the bankruptcy turnstiles since 2014, with the Debtor most recently emerging from bankruptcy (same court, same judge, case number 21-71095) in September 2021. Now, as then, the Debtor’s sole corporate member is Amsterdam Continuing Care Health System, Inc. ("ACCHS" or the "Member," dba as Amsterdam Nursing Home), which is also a New York not-for-profit corporation. This time around, the Debtor will pursue an asset sale, with New England Life Plan Communities Corp. (a not-for-profit corporation organized and existing under the laws of Massachusetts or "NELP'') to serve as stalking horse*. ACCHS, which has long-served as the Debtor's source of emergency funding, has agreed to prove $9.0mn of debtor-in-possession ("DIP") financing to see the Debtor through the sale process.

* In December of 2021 New England Life Plan Communities, financed by Hamlin Capital Management, became the new owner of "The Commons," a CCRC located in Lincoln, Mass. NELP appears to have been formed for purposes of acquiring "The Commons" CCRC, with its President Larry Bradshaw resigning as President and CEO of National Lutheran Communities & Services in May of 2021 before assuming the post of President and CEO at NELP.

The 2021 Bankruptcy (please see also our separate coverage and Plan Summary)

The key features of the 2021 bankruptcy were (i) a debt-for-debt exchange with outstanding principal under new bonds reflecting a $12.6mn reduction in debt, (ii) the extinguishment of a $59.5mn series of bonds and (iii) an injection of $58.7mn of new money via bond sales and a capital injection from ACCHS. 

The reduction of "bond obligations by nearly $80,000,000 plus accrued interest [and] additional bond purchase by the Consenting Holders and contributions by the Member…collectively bring[ing in] $58,710,000 of new money…" clearly not enough.

Th Debtors provided as to their 2021 Plan: "The Revised First Amended Plan is the product of extensive good faith, arm’s length negotiations between the Debtor and its primary stakeholders, including the trustee for the Debtor’s outstanding 2014 Bonds (including any successors, the '2014 Bond Trustee'), the holders of approximately 75% in principal amount of the Debtor’s 2014 Bonds (the 'Consenting Holders').

The Debtor worked cooperatively with its primary regulators, with its Residents and with the families of former residents who had significant claims for entrance fee refunds. The Revised First Amended Plan preserves the Debtor’s business, puts it on sound financial footing for the future and allows the Debtor to meet its obligations to past, present and future Residents. The Plan also puts the Debtor in compliance with applicable New York State regulations. The Revised First Amended Plan also facilitates the consummation of a debt-for-debt exchange supported by the vast majority of holders of 2014 Bonds and the issuance of new bond debt to fund plan obligations.

Under the Revised First Amended Plan, the Series 2014A Bonds and Series 2014B Bonds will be exchanged for Series 2021B Bonds in a face amount equal to 91% of their principal amount outstanding, a debt principal reduction of approximately $12,589,930. The existing Series 2014C Bonds, with an outstanding principal amount of $59,537,660, will be extinguished without any payment or consideration. Further, pursuant to the Revised First Amended Plan, not only will the Debtor reduce its bond obligations by nearly $80,000,000 plus accrued interest, but an additional bond purchase by the Consenting Holders and contributions by the Member will collectively bring $58,710,000 of new money into the Debtor to meet its debt service obligations, fund compliance with regulatory requirements (including minimum liquidity reserve requirements), fund the payment of entrance fee refunds to former residents [although without interest on their deposits] and fund operational expenses, dramatically improving liquidity.”

About the Debtor

According to the Debtor: “The Amsterdam at Harborside is sponsored by Amsterdam House Continuing Care Retirement Community, Inc. (AHCCRC), a not-for-profit organization affiliated with Amsterdam Nursing Home, founded in New York City more than 140 years ago. Amsterdam Nursing Home is widely known and highly regarded for providing care and services that meet the highest standards — comprehensive, individualized and deeply committed to serving the interests of residents. 

The Davis Declaration adds: "Incorporated in 2004, the Debtor is a New York not-for-profit corporation that has built and operates The Harborside, a best-in-class senior living community which is situated on approximately 8.9 acres in Port Washington, New York and is dedicated to giving its residents an enriching lifestyle. The Harborside is Nassau County’s first and only continuing care retirement community ('CCRC') licensed under Article 46 of the PHL, and offers its senior residents a continuum of care in a campus-style setting, providing living accommodations and related health care and support services to a target market of seniors aged sixty-two (62) and older. The Debtor’s sole corporate member is Amsterdam Continuing Care Health System, Inc. ('ACCHS' or the 'Member), which is also a New York not-for-profit corporation."

 

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The post Amsterdam House Continuing Care Retirement Community, Inc. (2023) – $80mn Reduction in Bond Debt and $59mn Capital Injection at Emergence from Bankruptcy in September 2021 Not Enough to Save Luxury Port Washington, NY Retirement Community appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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