Amsterdam House Continuing Care Retirement Community
UPDATE 1: Amsterdam House Seeks July 13 DS Hearing, Aug. 25 Confirmation Hearing to Effectuate Bond Refinancing Through Prenegotiated Plan
Mon 06/21/2021 08:50 AM
UPDATE 1: 8:50 a.m. ET 6/21/2021: Debtor Amsterdam House Continuing Care Retirement Community filed a solicitation procedures motion on Friday seeking approval of the following plan confirmation timeline for its prenegotiated plan filed at the outset of the case:
The plan timeline would enable the debtor to emerge from chapter 11 by September, in line with the plan support agreement’s contemplated case timeline, which requires that the effective date occur by Sept. 8. The proposed plan of reorganization would effectuate a balance sheet restructuring, as agreed to by at least 73% of the debtor’s Series 2014 bonds. The plan is designed to achieve a long-term solution for the debtor, including a restructuring of the bonds. To read more of our Americas Municipals' coverage of the Amsterdam House bond refinancing as well as our coverage of other timely, objective and actionable intelligence covering higher yielding and liquid municipal issuers request a trial here.
Original Story 2:04 p.m. UTC on June 16, 2021
Judge Trust Approves First Day Relief, Agrees to Enter Streamlined Cash Collateral Order; Offers Debtor Tentative Aug. 25 Confirmation Hearing
Relevant Document:
Agenda
At today’s first day hearing in the Amsterdam House Continuing Care Retirement Community Inc. case, Judge Alan S. Trust granted the bulk of the debtor’s requested first day relief with some modifications. The nonprofit, which built and operates the “best-in-class” senior living community in Port Washington, N.Y., known as The Harborside, filed for chapter 11 Tuesday with a prenegotiated plan of reorganization in hand based on a plan support agreement between the debtor, its sole member Amsterdam Continuing Care Health System Inc., bond trustee UMB Bank and the holders of approximately 73% of the principal amount outstanding of Series 2014 bonds (excluding accreted principal under Series C bonds) that are members of an ad hoc bondholder group. In addition to granting certain first day relief, Judge Trust also approved on a final basis the debtor’s motion to assume the PSA with the bondholders, which debtor’s counsel characterized as the “fruit of months of negotiation.”
Thomas Califano of Sidley Austin, proposed counsel for the debtor, praised the bondholders for working in close coordination with the debtor over the past several months to come up with a “comprehensive resolution” of the debtor’s issues. As described by Califano, that holistic resolution included a business plan and financing structure that would provide the debtor with “long-term viability” and permit the debtor to assume all residency agreements and “future life obligations” with their residents without modification. Califano remarked that both the debtor and the bondholders had been mindful of the fact that “these types of cases can take a toll on residents and their families.” Debtor’s counsel pointed out that as contemplated under the PSA, the plan provides for $18 million in financial commitments from the debtor’s sole member.
Judge Trust said that in order to accommodate the case milestones in the PSA, the court would be available to hold the final cash collateral and DS approval hearing on July 13 and a plan confirmation hearing on Aug. 25. Debtor’s counsel informed the court that the debtor intends to file a motion to approve the DS and plan solicitation procedures on Friday, June 18, and would incorporate the court’s suggested hearing dates into the proposed order.
The U.S. Trustee objected to the debtor’s cash collateral motion, arguing that the debtor’s proposed releases and “expansion of the collateral base” were not appropriate for approval on an interim basis. Debtor’s counsel clarified that the adequate protection package did not include a “rollup” or a “creeping rollup” and did not otherwise seek to cross-collateralize the prepetition debt, and that bondholders sought replacement liens on unencumbered assets only to the extent of any diminution in value of existing collateral. Debtor’s counsel also noted that the proposed adequate protection package did not include liens on avoidance actions or proceeds of such actions and that the releases only affected the debtor, with all rights preserved with respect to third parties.
Judge Trust agreed to authorize “emergency” (rather than interim) use of cash collateral only to the extent that the order is limited to providing protection of existing liens on collateral, replacement liens limited to diminution of value claims and other basic protections and waivers. Judge Trust directed the parties to provide him with a streamlined cash collateral order incorporating the revisions discussed at today’s hearing.
Judge Trust also granted today the debtor’s cash management motion on an interim basis over objection from the UST, which had taken issue with the establishment of DIP accounts.
The UST previewed that it would be objecting to the debtor’s motion to waive appointment of patient care ombudsman, citing the ongoing national health emergency and the fact that this was the debtor’s second bankruptcy filing since 2014. Judge Trust adjourned the motion to the second day hearing, noting that the court would be prepared to hear the motion on shortened notice, if necessary, “in the interest of public health and safety.”
Judge Trust also approved on a final basis the debtor’s motion to continue escrowing and refunding resident entrance fees. Debtor’s counsel explained that residents typically paid “sizeable” entrance fees ranging from $500,000 to $2.2 million that were amortized over time and argued that the relief sought in the motion was critical to protecting existing residents as well as minimizing uncertainty and risk for potential new residents, thereby ensuring the success of the restructuring.
Prompted by a question from Judge Trust on the possibility of a creditors’ committee, the UST said that given that most of the creditors are residents of the Harborside, establishment of a UCC was likely “not in the cards.”
The second day hearing, which will also serve as an interim hearing on the debtor’s cash collateral motion, is scheduled for Wednesday, June 23, at 9:30 a.m. ET.
The plan timeline would enable the debtor to emerge from chapter 11 by September, in line with the plan support agreement’s contemplated case timeline, which requires that the effective date occur by Sept. 8. The proposed plan of reorganization would effectuate a balance sheet restructuring, as agreed to by at least 73% of the debtor’s Series 2014 bonds. The plan is designed to achieve a long-term solution for the debtor, including a restructuring of the bonds. To read more of our Americas Municipals' coverage of the Amsterdam House bond refinancing as well as our coverage of other timely, objective and actionable intelligence covering higher yielding and liquid municipal issuers request a trial here.
Original Story 2:04 p.m. UTC on June 16, 2021
Judge Trust Approves First Day Relief, Agrees to Enter Streamlined Cash Collateral Order; Offers Debtor Tentative Aug. 25 Confirmation Hearing
Relevant Document:
Agenda
At today’s first day hearing in the Amsterdam House Continuing Care Retirement Community Inc. case, Judge Alan S. Trust granted the bulk of the debtor’s requested first day relief with some modifications. The nonprofit, which built and operates the “best-in-class” senior living community in Port Washington, N.Y., known as The Harborside, filed for chapter 11 Tuesday with a prenegotiated plan of reorganization in hand based on a plan support agreement between the debtor, its sole member Amsterdam Continuing Care Health System Inc., bond trustee UMB Bank and the holders of approximately 73% of the principal amount outstanding of Series 2014 bonds (excluding accreted principal under Series C bonds) that are members of an ad hoc bondholder group. In addition to granting certain first day relief, Judge Trust also approved on a final basis the debtor’s motion to assume the PSA with the bondholders, which debtor’s counsel characterized as the “fruit of months of negotiation.”
Thomas Califano of Sidley Austin, proposed counsel for the debtor, praised the bondholders for working in close coordination with the debtor over the past several months to come up with a “comprehensive resolution” of the debtor’s issues. As described by Califano, that holistic resolution included a business plan and financing structure that would provide the debtor with “long-term viability” and permit the debtor to assume all residency agreements and “future life obligations” with their residents without modification. Califano remarked that both the debtor and the bondholders had been mindful of the fact that “these types of cases can take a toll on residents and their families.” Debtor’s counsel pointed out that as contemplated under the PSA, the plan provides for $18 million in financial commitments from the debtor’s sole member.
Judge Trust said that in order to accommodate the case milestones in the PSA, the court would be available to hold the final cash collateral and DS approval hearing on July 13 and a plan confirmation hearing on Aug. 25. Debtor’s counsel informed the court that the debtor intends to file a motion to approve the DS and plan solicitation procedures on Friday, June 18, and would incorporate the court’s suggested hearing dates into the proposed order.
The U.S. Trustee objected to the debtor’s cash collateral motion, arguing that the debtor’s proposed releases and “expansion of the collateral base” were not appropriate for approval on an interim basis. Debtor’s counsel clarified that the adequate protection package did not include a “rollup” or a “creeping rollup” and did not otherwise seek to cross-collateralize the prepetition debt, and that bondholders sought replacement liens on unencumbered assets only to the extent of any diminution in value of existing collateral. Debtor’s counsel also noted that the proposed adequate protection package did not include liens on avoidance actions or proceeds of such actions and that the releases only affected the debtor, with all rights preserved with respect to third parties.
Judge Trust agreed to authorize “emergency” (rather than interim) use of cash collateral only to the extent that the order is limited to providing protection of existing liens on collateral, replacement liens limited to diminution of value claims and other basic protections and waivers. Judge Trust directed the parties to provide him with a streamlined cash collateral order incorporating the revisions discussed at today’s hearing.
Judge Trust also granted today the debtor’s cash management motion on an interim basis over objection from the UST, which had taken issue with the establishment of DIP accounts.
The UST previewed that it would be objecting to the debtor’s motion to waive appointment of patient care ombudsman, citing the ongoing national health emergency and the fact that this was the debtor’s second bankruptcy filing since 2014. Judge Trust adjourned the motion to the second day hearing, noting that the court would be prepared to hear the motion on shortened notice, if necessary, “in the interest of public health and safety.”
Judge Trust also approved on a final basis the debtor’s motion to continue escrowing and refunding resident entrance fees. Debtor’s counsel explained that residents typically paid “sizeable” entrance fees ranging from $500,000 to $2.2 million that were amortized over time and argued that the relief sought in the motion was critical to protecting existing residents as well as minimizing uncertainty and risk for potential new residents, thereby ensuring the success of the restructuring.
Prompted by a question from Judge Trust on the possibility of a creditors’ committee, the UST said that given that most of the creditors are residents of the Harborside, establishment of a UCC was likely “not in the cards.”
The second day hearing, which will also serve as an interim hearing on the debtor’s cash collateral motion, is scheduled for Wednesday, June 23, at 9:30 a.m. ET.
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