Hingham Campus, Linden Ponds secure court OK to solicit plan votes

By Caroline Salls

Pittsburgh, June 21 - Hingham Campus, LLC and Linden Ponds, Inc. have received conditional approval of the disclosure statement for their plan of reorganization, according to a Tuesday filing with the U.S. Bankruptcy Court for the Northern District of Texas.

Under the conditional order, the companies received court approval to begin soliciting votes on the plan.

A combined hearing on final approval of the disclosure statement, and confirmation of the plan is scheduled for Aug. 18 and Aug. 19.

As previously reported, all of Hingham's assets will be transferred to reorganized Linden Ponds under the plan, 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.

Interim DIP loan approved

In addition, Hingham Campus and Linden Ponds were granted interim access to $1 million of their proposed $6 million of debtor-in-possession financing from Redwood Capital Investments, LLC.

The final DIP financing hearing is scheduled for July 15.

The DIP loan will mature on the earliest of Nov. 8, the effective date of the 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.

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 companies filed for bankruptcy on June 14. The Chapter 11 case number is 11-33912.

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