Friendship Village’s Chapter 11 plan cannot be confirmed, UMB says

By Sarah Lizee

Olympia, Wash., Nov. 17 – Evangelical Retirement Homes of Greater Chicago, Inc.’s (Friendship Village of Schaumburg) disclosure statement for its Chapter 11 plan drew an objection from bond trustee UMB Bank, NA, according to documents filed Friday with the U.S. Bankruptcy Court for the Northern District of Illinois.

The bond trustee said the disclosure statement cannot be approved because the plan is unconfirmable.

The debtor intends to use sale proceeds to fund its Chapter 11 plan.

“Despite recognizing the bond trustee’s lien on and interest in the net sale proceeds, and despite the fact that the bond trustee has repeatedly told the debtor that it would not consent to the use of its collateral to fund the plan, it is from this source that the debtor intends to fund the plan,” UMB said.

The disclosure statement does not identify how much of the net sale proceeds the debtor intends to use to fund the plan.

However, given that the bond trustee’s estimated recovery is 23.3% of its $131.6 million allowed claim, or $30.66 million, and that the cash proceeds from the sale is at least $35.57 million, the approximate cost of the plan is at least $4.91 million – all of which the debtor proposes to pay from the bond trustee’s collateral despite the bond trustee’s express and repeated objection, UMB said.

The Schaumburg, Ill.-based retirement community filed bankruptcy on June 9 under Chapter 11 case number 23-07541.

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