Oct. 24 (Bloomberg) -- South Franklin Circle, a nonprofit continuing care retirement community, filed a so-called pre-packaged bankruptcy with a plan to reduce its total secured debt by about 40 percent.
The company listed assets of $167.2 million and debt of $166.3 million, measured by book value, as of Dec. 31 in Chapter 11 documents filed today in U.S. Bankruptcy Court in Cleveland. In fiscal years 2010 and 2011, the company had net losses of $9.3 million and $7.8 million, respectively.
“The economic downturn has caused lower than expected occupancy rates at South Franklin Circle, which has led to South Franklin Circle not being able to independently service its debt,” Cynthia Dunn, South Franklin’s chief executive officer, said in court papers. About 53 percent of the 199 independent living units and more than half of the 40 assisted-living units are occupied, according to court papers.
The company said the proposed plan is supported by the requisite majority of its pre-bankruptcy secured lenders. South Franklin Circle will swap current secured debt totaling about $100.6 million for a new bond and term-note secured debt of $66.75 million, court papers show.
The 239-unit community, for adults over 50, sits on 90-acres about 25 miles southeast of Cleveland. The company employs about 103 full-time and part-time workers.
Residents of the South Franklin Circle facility will be unaffected by the restructuring as membership agreements will be honored, according to court papers. Under the accords with South Franklin Circle, each resident pays a one-time entrance fee and monthly service fees. Entrance fees range from $251,000 to about $566,000. Monthly service fees range from $2,416 to $3,623.
The case is In re South Franklin Circle, 12-17804, U.S. Bankruptcy Court, Northern District of Ohio (Cleveland).
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