Edgemere, bond trustee reach agreement; new Chapter 11 plan filed

By Sarah Lizee

Olympia, Wash., Dec. 7 – Northwest Senior Housing Corp., which does business as Edgemere Dallas, has filed a new Chapter 11 plan with the support of UMB Bank, NA as bond trustee and debtor-in-possession lender, sole member Lifespace Communities, Inc., and the official committee of unsecured creditors with the U.S. Bankruptcy Court for the Northern District of Texas.

Previously, the debtor and committee had filed a plan that had Lifespace serving as plan sponsor.

The bond trustee had filed a separate plan, based on a sale of the community to stalking horse Bay 9 Holdings LLC for $48.5 million.

The new plan implements the sale to initial purchaser Bay 9, subject to higher or better offers. The purchaser of the community will continue to run it as a going concern.

Competing bids are due by 5 p.m. ET on Jan. 13, and an auction, if needed, will be held on Jan. 17.

The remaining assets of the estates will be transferred to a litigation trust to be liquidated for the benefit of creditors.

Edgemere said that consultants have concluded that the community can’t continue to operate only as an entrance fee community. As such, the plan converts the community into a rental model.

The plan will also include a settlement of all potential estate, trustee, DIP and resident claims against Lifespace in exchange for a $16.5 million payment to the trustee on the effective date for distribution in current holders of the original bonds, and annual payments made into a residents trust, which will be used to pay participating residents for claims relating to their residency agreements.

In exchange for the Lifespace residency contributions and the release provided under the plan, Lifespace will be entitled to a pro rata distribution of litigation trust assets.

Holders of other priority claims will receive payment in full in cash.

Holders of bond claims are estimated to receive distributions of about 40% of their bond claims.

Holders of general unsecured claims will receive a pro rata share of the litigation trust proceeds. They’re expected to receive distributions ranging from zero to 50% of their claims, depending on the outcome of litigation with landlord Intercity Investment Properties, Inc. and the liquidation of the other litigation trust assets.

Holders of former and current resident claims who opt out of the Lifespace settlement will receive a general unsecured claim. Those who don’t opt out will receive cash from the residents trust in an amount equal to their refund claim.

Intercompany claims held by Lifespace will be waived and released with no distribution.

The interests held by Lifespace will be terminated.

The Dallas-based luxury senior living community filed Chapter 11 bankruptcy on April 14, 2022 under case number 22-30659.

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