Edgemere committee opposes landlord’s motion to dismiss case

By Sarah Lizee

Olympia, Wash., Sept. 15 – The official committee of unsecured creditors for Northwest Senior Housing Corp., which does business as Edgemere Dallas, objected to landlord Intercity Investment Properties, Inc.’s motion to dismiss the company’s Chapter 11 bankruptcy case, according to court documents filed with the U.S. Bankruptcy Court for the Northern District of Texas.

As previously reported, the landlord claims the debtors’ plan is unconfirmable, making rehabilitation impossible, the debtors’ estates are suffering “substantial, continuing losses” through the accrual of administrative expenses, and dismissal is a better outcome than other alternatives, namely conversion and liquidation.

The committee said characterizing the plan as “unconfirmable” with terms that are “illegal,” the motion to dismiss essentially mirrors arguments made in the ongoing litigation between the debtors and the landlord.

The group noted that in a previous order, the court rejected many of those same arguments, mainly that the relief the debtors seek through the litigation, and upon which the plan is based, is impossible or illegal.

There, the court ruled that the litigation should continue, as the debtors have stated plausible claims for relief.

“For the time being, these Chapter 11 cases should continue, as well, to allow the debtors to pursue those claims,” the committee said.

The group also said that the motion fails to recognize the possibility of a different plan that may be proposed later that could successfully reorganize the debtors.

“The committee is actively engaged with stakeholders in contingency planning for potential alternate restructuring scenarios that may only be possible in bankruptcy, and the bankruptcy process is designed to allow such contingencies to be formulated and pursued,” the group said.

“The landlord’s ‘one strike and you’re out’ premise is nonsensical.”

The committee also said that accrual of unpaid administrative expenses, by itself, is not equivalent to the requisite “negative cash flow or declining asset values,” nor does it constitute cause to dismiss otherwise viable bankruptcy cases.

The committee also said that the landlord can’t demonstrate that dismissal – and a return to the prepetition status quo as between the debtors and the landlord – is in the best interests of the estate.

“Dismissing these Chapter 11 cases does nothing to assist the debtors in reorganizing and remaining viable for the benefit of those residents and their community they call home and is not in the best interests of the debtors or their estates,” the committee said.

The Dallas-based luxury senior living community filed Chapter 11 bankruptcy on April 14 under case number 22-30659.

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