Lifespace CCRC Files for Chapter 11 Bankruptcy and Sues Owner
A luxury community owned and operated by Lifespace Communities files for Chapter 11 bankruptcy after encountering financial headwinds due to the Covid-19 pandemic.
The Dallas, Texas-based Continuing Care Retirement Community (CCRC), Edgemere is currently negotiating with its financial stakeholders on a restructuring plan, according to an April 14 news release regarding the bankruptcy filing. The community is also seeking court approval for debtor in possession financing provided by UMB Bank.
Lifespace, based in West Des Moines, Iowa, is a nonprofit organization that owns and operates 14 CCRCs in seven states. The operator affiliated with Texas-based Senior Quality Lifestyles Corporation (SQLC) in 2019.
The 504-unit CCRC has liabilities totaling between $100 million and $500 million, according to its bankruptcy filing. All of the community’s top 30 unsecured claims are related to refundable entry fees; with two residents who owed more than $1.2 million and $1.3 million, according to bankruptcy papers.
The community has faced many challenges since the start of the Covid-19 pandemic, with occupancy falling to 74% in 2021 from 93% in 2018, according to financial records obtained by Dallas Morning News. watch. This has contributed to the community’s annual losses, which reached $30 million in 2021.
A historic winter storm that tore up Texas in February 2021added to the company’s problems, Lifespace President and CEO Jesse Jantzen said in a press release.
“Like the previous challenges we overcame, we will address these issues head on and remain committed to identifying a long-term financial solution,” he said.
In addition to the Chapter 11 bankruptcy filing, the community also sued its owner Intercity Investments Inc. and its agent, private equity firm Kong Capital. In his initial complaintEdgemere alleged breach of contract, fraud and interference with business and civil conspiracy, among other claims.
“The only outstanding piece is the resolution with the owner and his agents, and we have filed a lawsuit against them alleging claims for their actions over the past year,” Jantzen said in a statement.
Despite the bankruptcy filing, the community will remain open and operational throughout its restructuring process. Lifespace Communities has not filed for Chapter 11 and will remain the owner and operator of the community.
Lifespace isn’t the only CCRC or lifeplan community to file for bankruptcy as a result of the Covid-19 pandemic.
For example, the organization behind The Prospect-Woodward Home, a New Hampshire CCRC, filed for Chapter 11 bankruptcy protection last year before being acquired by Covenant Living, a non-profit organization based in Skokie, Illinois.
Residents paid an entrance fee ranging from around $350,000 to over $1.4 million.
The Dallas Morning News reported Edgemere’s financial headwinds in February when a forbearance expired that had allowed the community to delay rent payments.
Citing the impact of the Covid-19 pandemic and Winter Storm Uri, a major winter system that caused nearly 10 million power outages in early 2021, Lifespace Communities President and CEO Jesse Jantzen, promised to tackle the restructuring head-on in a statement.
Along with the bankruptcy filing, Edgemere filed a lawsuit against its owner, Intercity Investments, Inc., and Intercity’s agent, Kong Capital, according to a statement.