The Clare Seeks Bankruptcy Protection

November 16, 2011

November 16, 2011. The Clare at Water Tower, the financially troubled CCRC in downtown Chicago, finally filed for Chapter 11 bankruptcy protection.  Houlihan Lokey has been hired...

as its financial adviser, and Redwood Capital Investments is lined up to be the DIP lender for an aggregate amount of $12.0 million.  The search is on for a stalking horse bidder, but the price isn’t going to be very high with more than $62 million of refundable entrance fees as a liability and just 33% of the 248 of the independent living units occupied. At least the 54 assisted living units have a 52% occupancy rate and the health center is at 91%.  The original debt outstanding was $229 million, or $685,000 per unit/bed, and the various tranches of bonds have traded between 15 cents and 35 cents on the dollar in recent months.  The goal is to receive a letter of intent from a stalking horse bidder no later than January 10, 2012, with the entire process wrapped up by mid-May.  While bondholders may be lucky to get 10% of par value in the process, the real question will be how those refundable entrance fees are handled, and valued, by a bidder.

 

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