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TAG | bankrupt Erickson Retirement Community

Dec/10

11

Did You Invest in Erickson Retirement Communities, LLC, Before They Filed Bankruptcy?

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Erickson Retirement Communities LLC, a developer of 20 senior living campuses, filed for bankruptcy in October of 2009.  Redwood Capital Investments LLC, won an auction to acquire substantially all of its assets. Redwood Capital, based in Maryland, is controlled by Baltimore businessman Jim Davis, who is also chairman and majority owner of privately held staffing company Allegis Group.

Erickson, based in Baltimore, listed more than $1 billion dollars in assets and liabilities in filings in federal bankruptcy court in Dallas.  At least 14 related entities also filed for bankruptcy protection. Erickson has retirement communities in Pennsylvania, Texas, Virginia, Massachusetts, Maryland, Michigan, New Jersey, Kansas and Illinois, according to its web site.

On April 18, 2010, the attorneys for Erickson Retirement Communities LLC and its affiliated debtors emerged from bankruptcy after the US Bankruptcy Court for the Northern District of Texas confirmed the debtors’ plan of reorganization and sale to Redwood Capital Investments LLC.  The exit from Chapter 11 culminated with Redwood Capital agreeing to purchase all of Erickson’s assets for $365 million after Erickson spent just over six months in the bankruptcy process. The conditions of Redwood Capital’s successful bid required that a consensual plan of reorganization be agreed to by Erickson’s numerous creditors holding in excess of $2 billion of debt no later than April 30, 2010.  Erickson’s organization included 20 continuing-care retirement communities that serve more than 23,000 residents throughout 11 states.

“We pursued an aggressive time schedule designed to capitalize on Erickson’s inherent value in the senior living sector and to avoid a deterioration of Erickson’s business. The expedited auction and reorganization allowed the company to preserve value for all stakeholders and protect the residents interest in their living communities,” said John Cusack, Vice-chair of DLA Piper’s Finance practice and Chair of its Real Estate Capital Markets Group. “With financing for the purchase and development of new senior living facilities still generally unavailable to its competitors, Erickson under Redwood Capital’s ownership will find itself in a unique position to grow based on several existing sites that are ready for development and expansion.”

“It’s highly unusual and remarkable that a complex bankruptcy of this scale was completed in such a tight timeframe,” said Thomas Califano, vice chair of DLA Piper’s Restructuring practice. “It was essential that this transaction and reorganization be completed in an expeditious manner to preserve the rights of the residents. The only way this would be done was by aggressively driving the process to a result.”

Jim Davis of Redwood Capital, acknowledged to the Baltimore Sun, that the company must reverse negative perceptions stemming from the financial collapse, especially among seniors who pay $400,000 or more to live in the retirement campuses. He must also continue to contend with an economy and real estate market that haven’t fully recovered.

If your broker or financial institution sold you subordinate notes or investments in Erickson Retirement Communities, LLC, prior to the bankruptcy,  you may be able to recover your losses. Call a Securities arbitration lawyer for a free consultation on how to recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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