Judge confirms bankruptcy exit plan for former Texas senior living operator
2 min read
The former operator of three Dallas-area senior living communities received federal court approval Monday for its bankruptcy liquidation plan, which will leave bondholders impaired.
Northern District of Texas Bankruptcy Court Judge Stacey Jernigan confirmed the plan for Christian Care Centers, which filed for Chapter 11 bankruptcy in May amid continued financial struggles in the senior living sector.
At that time, the nonprofit organization said it owed $50.8 million in outstanding principal and $3.256 million in unpaid interest on bonds it sold in 2014 and 2016 through the Mesquite Health Facilities Development Corporation, while its assets totaled about $52.4 million. Its representative said bankruptcy was sought because an asset sale was not likely to pay bondholders in full.
In July, the judge approved the sale of all Christian Care assets to North Texas Benevolent Holdings for $44.25 million.
Creditors overwhelmingly approved the liquidation plan, which cancels the bonds, according to a court filing last week.
“The settlements have been negotiated at arm’s length and have been entered in good faith,” the judge’s confirmation order stated. “The settlements avoid costly, time-consuming and risky litigation and pave the way toward achieving the highest and best recovery to the creditors of the debtors through liquidation of debtors’ assets.”
In the years preceding the bankruptcy filing, Christian Care failed to meet certain bond covenants, defaulted on payments, and entered into forbearance agreements with bond trustee UMB Bank, according to a court filing.
Founded in 1947, Christian Care provided independent living, assisted living, memory care, and skilled nursing at its facilities. The court approved a name change to CCC Wind Down, Inc. after the closing of its asset sale.
The senior living sector accounted for the largest share of first-time bond payment default last year, according to a December BofA Global Research report, which said more defaults are expected this year.
Fitch Ratings assigned a deteriorating outlook to the sector for 2023, noting it faces significant headwinds from inflation, labor pressures that could stall its recovery from the COVID-19 pandemic.
