Linden Ponds, Hingham Campus file bankruptcy with bondholder support

By Caroline Salls

Pittsburgh, June 14 - Linden Ponds, Inc. and Hingham Campus, LLC filed Chapter 11 bankruptcy on June 14 in the U.S. Bankruptcy Court for the Northern District of Texas.

After efforts to negotiate an out-of-court exchange offer and pre-packaged plan solicitation were unsuccessful, Linden Ponds and Hingham said they entered into a restructuring, lockup, plan support and forbearance agreement with consenting holders of its series 2007 bonds.

Under the Linden Ponds and Hingham plan of reorganization, all of Hingham's assets will be transferred to reorganized Linden Ponds, the agreements between Hingham and Linden Ponds will be terminated and Hingham will cease operations.

Creditor treatment

Treatment of creditors under the plan will include the following:

• Holders of priority claims will be paid in full in cash;

• Holders of series 2007 A bond claims will receive a 5.5% series 2011 A-1 bond in a principal amount equal to a percentage of the principal amount of the series 2007 A bond tendered. The principal amount of the bond will be reduced by multiplying the series 2011 A-1 percentage by the 2007 A series factor and the interest rate being increased to 6.25% so the cumulative debt service for the bond will be the same as if the par amount accrued interest at 5.5%.

Holders of series 2007 A bond claims will also receive a series 2011 A-2 bond in a principal amount equal to the series 2011 A-2 percentage of the principal amount of the series 2007 A bond held, as well as a series 2011 B bond in a principal amount equal to the series 2011 B percentage of the 2007 A bond held.

These creditors will also be paid in cash for accrued interest;

• Holders of series 2007 B/C bond claims will receive amended 2007 B bonds in a total principal amount equal to the amended series 2007 B percentage of the principal amount of the original bonds, provided that the amended 2007 B bonds will be issued carrying either a 5.5% fixed rate or a variable rate, at the election of the debtors' bank.

Holders of series 2007 B/C bond claims will also receive a series 2011 A-2 bond in a principal amount equal to the series 2011 A-2 percentage of the principal amount of the series 2007 B or C bond held, as well as a series 2011 B bond in a principal amount equal to the series 2011 B percentage of the 2007 B or C bond held.

These creditors will also be paid in cash for accrued interest;

• Other secured claims will be reinstated;

• Holders of Linden Ponds general unsecured claims will be paid in full in cash;

• Holders of Hingham general unsecured claims will receive no distribution;

• Holders of manager claims will be paid in full in cash for the unpaid portion of claims arising from a transitional subcontract agreement or current management agreement, and Linden Ponds will enter into a new management agreement;

• Interests in Linden Ponds will be reinstated; and

• All of the interests in reorganized Hingham will be transferred to reorganized Linden Ponds.

The companies are asking the court to schedule a combined hearing on the pre-packaged plan and disclosure statement for Sept. 15 and Sept. 16.

DIP loan terms

In connection with the bankruptcy filing, Linden Ponds and Hingham have obtained a commitment for $6 million in debtor-in-possession financing from Redwood Capital Investments, LLC.

The DIP loan will mature on the earliest of Nov. 8, the effective date of the company's plan of reorganization and the occurrence of an event of default.

Interest will be Libor plus 250 basis points.

The companies must pay a $250,000 commitment fee.

The companies are seeking interim access to $1 million of the DIP financing.

According to court documents, Hingham has $100 million to $500 million in both assets and debt.

The company is represented by DLA Piper LLP US.

Senior Living Retirement Communities LLC, formerly known as Erickson Retirement Communities, LLC, is the sole member of Hingham Campus. Linden Ponds operates the companies' continuing care retirement communities.

Linden Ponds is based in Hingham, Mass., and Hingham Campus is based in Baltimore. The Chapter 11 case number is 11-33912.

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