Amsterdam House Continuing Care Retirement Community
CASE SUMMARY: Operator of The Harborside Senior Living Community Seeks to Restructure Through Prenegotiated Plan Supported by 73% of Principal Amount of Series 2014 Bonds; Restructuring Premised on Bond Exchange
Tue 06/15/2021 16:00 PM
Relevant Documents:
Voluntary Petition
First Day Declaration
Plan of Reorganization / Disclosure Statement
Motion to Assume Plan Support Agreement
Cash Collateral Motion
Financial Analysis Summary Package
Notice to Bondholders / 2007 Offering Memorandum
First Day Hearing Agenda
Plan of Reorganization / Disclosure Statement
The debtor’s plan sets forth the following classification of allowed claims and interests:
Treatment of Claims and Interests
The debtor’s plan sets forth the following classification of and proposed distributions to holders of allowed claims and interests:
Existing bondholders would purchase up to $40.7 million in Series 2021A bonds, which would be issued as tax-exempt to the extent permitted by bond counsel. The proceeds of the new bonds would be used to fund a $20.8 million repayment of refund obligations, $9 million for the MLR, with the remainder to fund a debt service reserve fund, a contingency and cost of issuance. The Series 2021A bonds would be secured by a first priority lien on all assets of the debtor, except the liquidity support agreement. They would accrue interest at 9% and mature Jan. 1, 2041. Payments would be interest only for the first five years (through fiscal year 2025) payable semiannually, with principal to start amortizing beginning fiscal year 2026 over a 15-year period. The bonds would be subject to optional redemption at par in year 10 and would also be subject to optional redemption at a make whole redemption price from year five to year 10.
The amortization schedule for the Series 2021A bonds is below:
Series 2014A/B Bonds Exchanged for Series 2021B Bonds
The Series 2014A bonds and Series 2014B bonds (in the current aggregate principal amount of $139.9 million) would be exchanged for new Series 2021B bonds in a principal amount equal to 91% of the current principal amount and would be subordinate in payment and security to the Series 2021A bonds. The Series 2021B bonds would be secured by a first priority lien on all of the debtor’s assets, except the liquidity support agreement, and subject to the payment priority of the Series 2021A bonds. The bonds would mature Jan. 1, 2058. Interest on the Series 2021B bonds would be reduced “from the current fixed blended rate of 6.613% to a fixed rate of 5.0% per annum.” Interest would increase by 25 basis points upon the earlier of “(i) incurrence of indebtedness for Phase II, (ii) 20 years from the Effective Date and (iii) the Borrower has 150 DCOH above the MLR Requirement.” Payments on the Series 2021B bonds would be interest only for the first 20 years, paid semiannually, with principal to start amortizing beginning fiscal year 2040, provided that the Series 2021B bonds would be subject to mandatory redemption from “Excess Cash” after the Series 2021A bonds are paid in full. The Series 2021B bonds would not be subject to optional redemption for the first five years but would be thereafter as follows:
The amortization schedule for the Series 2021B bonds is as follows:
Series 2014C Bonds
The Series 2014C bonds (which have accreted value as of Feb. 25 of $67.5 million) would be canceled in whole without any payment or consideration.
Milestones
The plan support agreement includes the following milestones:
Other Plan Provisions
As of the effective date, the members of the board of directors and officers of the debtor as of the petition date would remain in their current capacities as directors and officers of the reorganized debtor unless otherwise disclosed in the plan supplement.
The plan provides for mutual releases between (i) the debtor; (ii) the reorganized debtor; (iii) the 2014 bond trustee; (iv) the holders of the 2014 bonds that are parties to the plan support agreement; (v) the debtor’s sole member, Amsterdam Continuing Care Health System Inc., (vi) Nassau County Industrial Development Agency, in its capacity as the issuer under the 2014 indenture, (vii) the 2021 bond trustee; and (viii) the to-be-determined issuer pursuant to the 2021 Indenture.
In addition, the plan includes an exculpation provision in favor of (i) the debtor; (ii) the reorganized debtor; (iii) the 2014 bond trustee and the 2021 bond trustee; (iv) the holders of the 2014 bonds that are parties to the plan support agreement; and (v) the Amsterdam Continuing Care Health System Inc. and its board, affiliates, professionals, employees and advisors.
The liquidation analysis and financial projections have not been provided and remain bracketed in the DS on file.
The debtor also seeks to assume the plan support agreement.
Cash Collateral Motion
The company seeks authority to use approximately $7.5 million of cash collateral of the 2014 bond trustee UMB Bank. The debtor says that access to cash collateral is “critical” to its ability to fund postpetition operations that will allow The Harborside to continue to provide “competent nursing care and enriched housing services.”
The company proposes the following adequate protection to UMB Bank: replacement liens, allowed superpriority administrative expense claims, financial reporting requirements and compliance with bond documents (including maintenance, insurance, taxes and title). The replacement lien would attach to the postpetition bond collateral and supplemental collateral, consisting of all proceeds, rents, products and profits.
Under the adequate protection package, chapter 5 avoidance actions would not be included in the postpetition collateral securing the replacement lien, but UMB reserves the right to request that the postpetition collateral include avoidance actions in any final order.
The company would be prohibited from using UMB’s cash collateral to: (i) object to, or contest in any manner, or raise any defense to, the validity, amount, extent, perfection, priority or enforceability of the Series 2014 bonds, the prepetition bond collateral, the bond claim or any liens or security interests with respect thereto; (ii) assert any claims or defenses or causes of action against UMB, the bondholders, including causes of action related to the Series 2014 bonds or any chapter 5 avoidance actions, including with respect to payments made pursuant to the bond documents; (iii) pay any prepetition claims, except to the extent provided for in the budget; (iv) seek to modify any of the rights granted to UMB; or (v) seek to bifurcate any UMB’s claims.
In addition, the debtor proposes a waiver of the estates’ right to seek to surcharge its collateral pursuant to Bankruptcy Code section 506(c) and the “equities of the case” exception under section 552(b).
The carve-out for professional fees is $675,000.
The lien challenge deadline is 75 days from the entry of the interim cash collateral order. The UCC’s lien investigation budget is $10,000.
The proposed cash collateral budget is HERE.
Other Motions
The debtor also filed various standard first day motions, including the following:
Voluntary Petition
First Day Declaration
Plan of Reorganization / Disclosure Statement
Motion to Assume Plan Support Agreement
Cash Collateral Motion
Financial Analysis Summary Package
Notice to Bondholders / 2007 Offering Memorandum
First Day Hearing Agenda
| Summary |
| Amsterdam House Continuing Care Retirement Community operates The Harborside senior living community in Port Washington, N.Y. |
| Debtor has filed a pre-negotiated chapter 11 plan supported by 73% of the principal amount of outstanding series 2014 bonds |
| Seeks to achieve “sustainable capital structure” through restructuring, aiming to emerge in September |
Amsterdam House Continuing Care Retirement Community Inc., a nonprofit that built and operates The Harborside, a “best-in-class” senior living community situated on approximately 8.9 acres in Port Washington, N.Y., filed for chapter 11 protection on Monday, June 14, in the Bankruptcy Court for the Eastern District of New York. After defaults under the debtor’s outstanding 2014 bonds issued by the Nassau County Industrial Development Agency, the debtor filed chapter 11. The debtor seeks to to implement a comprehensive balance sheet restructuring and bond financing through a prenegotiated chapter 11 plan based on a plan support agreement negotiated between the debtor, its sole member, 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 hoc committee of bondholders. The bond trustee has issued a notice to bondholders saying that the agreement was reached after “months of negotiations” and is designed to achieve a “long term solution to Amsterdam’s defaults and related issues, including a restructuring of the Bonds.” The debtor says it intends to emerge from chapter 11 in September 2021.
Pursuant to the plan, (i) certain existing bondholders would purchase an additional $40.7 million in new-money bond financing (Series 2021A bonds) to fund (a) $20.8 million repayment of outstanding refund obligations, (b) $9 million toward a minimum liquid reserve requirement and (c) a debt service reserve fund, a contingency and the costs of issuance; (ii) the existing Series 2014A and Series 2014B bonds, which currently total $139.9 million in principal amount, would be exchanged for new Series 2021B bonds in a face amount equal to 91% of the principal amount outstanding of existing Series 2014A bonds and Series 2014B bonds, in the principal amount of $127.3 million; (iii) past due and accrued interest on the Series 2014A and Series 2014B bonds and the entirety of the Series 2014C bonds would be extinguished; (iv) the sole member of the debtor, Amsterdam Continuing Care Health System Inc., would contribute $9 million; and (v) Amsterdam Continuing Care Health System Inc. would also provide an additional $9 million liquidity support agreement for not less than a 10-year period, which would be reserved for making payments to keep the debtor in regulatory compliance, including with respect to payments of unpaid entrance fee refunds and satisfaction of a minimum liquidity reserve requirement that may become due in the future.
“Critically,” the debtor says, it intends to assume all residency agreements and admissions agreements for existing residents. The proposed plan would enable the debtor to honor its existing entrance fee refund obligations to former residents and would provide it with the ability to meet the future obligations to current and prospective residents. Entrance fees paid by residents and prospective residents who signed their residency agreements or paid their waitlist deposits on or after Oct. 25, 2020, would be maintained in an escrow pending entry of an order confirming the plan, for the benefit of the resident paying such entrance fees.
The first day hearing has been scheduled for tomorrow, Wednesday, June 16, at 9:30 a.m. ET.
The company reports $210.1 million in assets on a book value basis as of March 31 (consisting of $2.6 million in cash and cash equivalents, $876,153 in accounts receivable, $192.2 million in net fixed assets, $13.4 million of restricted cash and $183,114 of other assets) and $425.4 million of liabilities (net of accumulated amortization of nonrefundable entrance fees, deferred financing costs and original issue premiums). The company’s prepetition capital structure includes:
According to a notice to current bondholders posted to EMMA, the municipal market disclosure site, the Series 2014 bond issuances have the following CUSIPs, maturities and interest rates:
The debtor is represented by Sidley Austin in New York as counsel and RBC Capital Markets as investment banker. KCC is the claims agent. Mintz Levin Cohn Ferris Glovsky & Popeo represents the 2014 bond trustee, UMB Bank. The case has been assigned to Judge Alan S. Trust (case No. 21-71095).
Events Leading to the Bankruptcy Filing
The company attributes the bankruptcy to an inability to attract new residents at the budgeted pace, which caused a shortfall in liquidity. This situation worsened as the impact of the Covid-19 pandemic hindered the debtor’s ability to attract new residents. Accordingly, to preserve liquidity, the debtor ceased making payments under its bond obligations and suspended payments of resident entrance fee refunds, which caused the debtor to fall out of compliance with the terms of its residency agreements and with respect to New York Public Health Law. The debtor reported noncompliance to the Department of Health, which issued a citation for non-payment of nine refunds at a total amount of $5.2 million, which the DOH later updated with an addendum of 19 entrance fee refunds totaling approximately $12 million. Currently, 33 refunds totaling $20.3 million are unpaid.
According to a financial analysis summary package posted to EMMA, the debtor defaulted under the bond documents for failing to maintain a debt service coverage ratio, to meet a liquidity covenant, maintain the required amount of cash on hand covenant and make required monthly deposits. The debtor entered into forbearance agreements with the trustee, at the direction of a majority of bondholders in October 2020, November 2020 and January 2021.
This is the debtor’s second chapter 11 filing, after previously filing in 2014, during which case the company restructured Series 2007 bonds by exchanging them for the Series 2014 bonds.
Background
Incorporated in 2004, the debtor is a New York not-for-profit corporation that built and operates The Harborside, a “best-in-class” senior living community situated on approximately 8.9 acres in Port Washington, N.Y. The Harborside offers its senior residents a continuum of care in a campus-style setting, providing living accommodations and related healthcare and support services to a target market of seniors aged 62 and older. The debtor’s sole corporate member is Amsterdam Continuing Care Health System Inc., which is also a New York not-for-profit corporation.
The Harborside offers approximately 329 units of varying sizes for independent, “enriched” and skilled nursing care, with 26 enriched housing units, 18 special needs assisted living residence units (also licensed as enhanced assisted living residence units) and 56 skilled nursing beds in its Isaac H. Tuttle Health Center to provide short-term rehabilitation and long-term care to its residents and to individuals living in the community who enter into an admissions agreement. The Tuttle Health Center is certified for Medicare and Medicaid and is also licensed by the New York State Department of Health. Approximately 10% of residents in the Tuttle Health Center are covered by Medicaid.
The debtor is a party to an administrative services agreement with affiliate Amsterdam Consulting LLC (assigned from affiliate Amerstam Services Corp.) through which Amsterdam Consulting provides administrative, supervisory and fiscal advisory and consulting services for the skilled nursing facility component of The Harborside. The debtor paid $163,894 in administrative services fees for the fiscal year ended Dec. 31, 2020. The debtor also receives financial advisory support from GMSC New York LLC under a contract that expires in October 2022 and marketing advisory support from GCD New York in connection with a marketing advisory services agreement executed upon the effective date of the 2014 chapter 11 case, which also expires in October 2022.
The debtor offers prospective independent living residents the choice of three residency plans, differing with respect to the required entrance fees (which are used primarily to pay refunds to outgoing residents, pay certain project costs, retire debt, cover operating expenses and generate investment income for the facility and its residents), monthly service fees and the amount that potentially can be refunded thereunder. Entrance fees in 2021 paid by residents before they occupy a unit range from $527,249 to $2.2 million. Monthly service fees range from $2,593 to $8,089.
The debtor provides the following financial overview for the four months ended April 30 in an EMMA filing:
The company’s corporate organizational structure is below:
With the sole exception of the $1.2 million PPP loan, the debtor’s list of 30 largest unsecured creditors consists entirely of entrance fees owed to residents ranging from $855,213 to $1.4 million.
The case representatives are as follows:
Pursuant to the plan, (i) certain existing bondholders would purchase an additional $40.7 million in new-money bond financing (Series 2021A bonds) to fund (a) $20.8 million repayment of outstanding refund obligations, (b) $9 million toward a minimum liquid reserve requirement and (c) a debt service reserve fund, a contingency and the costs of issuance; (ii) the existing Series 2014A and Series 2014B bonds, which currently total $139.9 million in principal amount, would be exchanged for new Series 2021B bonds in a face amount equal to 91% of the principal amount outstanding of existing Series 2014A bonds and Series 2014B bonds, in the principal amount of $127.3 million; (iii) past due and accrued interest on the Series 2014A and Series 2014B bonds and the entirety of the Series 2014C bonds would be extinguished; (iv) the sole member of the debtor, Amsterdam Continuing Care Health System Inc., would contribute $9 million; and (v) Amsterdam Continuing Care Health System Inc. would also provide an additional $9 million liquidity support agreement for not less than a 10-year period, which would be reserved for making payments to keep the debtor in regulatory compliance, including with respect to payments of unpaid entrance fee refunds and satisfaction of a minimum liquidity reserve requirement that may become due in the future.
“Critically,” the debtor says, it intends to assume all residency agreements and admissions agreements for existing residents. The proposed plan would enable the debtor to honor its existing entrance fee refund obligations to former residents and would provide it with the ability to meet the future obligations to current and prospective residents. Entrance fees paid by residents and prospective residents who signed their residency agreements or paid their waitlist deposits on or after Oct. 25, 2020, would be maintained in an escrow pending entry of an order confirming the plan, for the benefit of the resident paying such entrance fees.
The first day hearing has been scheduled for tomorrow, Wednesday, June 16, at 9:30 a.m. ET.
The company reports $210.1 million in assets on a book value basis as of March 31 (consisting of $2.6 million in cash and cash equivalents, $876,153 in accounts receivable, $192.2 million in net fixed assets, $13.4 million of restricted cash and $183,114 of other assets) and $425.4 million of liabilities (net of accumulated amortization of nonrefundable entrance fees, deferred financing costs and original issue premiums). The company’s prepetition capital structure includes:
- Secured debt:
According to a notice to current bondholders posted to EMMA, the municipal market disclosure site, the Series 2014 bond issuances have the following CUSIPs, maturities and interest rates:
- Unsecured debt:
- Trade debt: $1.4 million
- Current resident refund obligations: $16.4 million
- Future entrance fee liabilities: $167.7 million
- PPP loan: $1.2 million.
- Equity: The debtor is a nonprofit, and its sole member is Amsterdam Continuing Care Health System Inc.
The debtor is represented by Sidley Austin in New York as counsel and RBC Capital Markets as investment banker. KCC is the claims agent. Mintz Levin Cohn Ferris Glovsky & Popeo represents the 2014 bond trustee, UMB Bank. The case has been assigned to Judge Alan S. Trust (case No. 21-71095).
Events Leading to the Bankruptcy Filing
The company attributes the bankruptcy to an inability to attract new residents at the budgeted pace, which caused a shortfall in liquidity. This situation worsened as the impact of the Covid-19 pandemic hindered the debtor’s ability to attract new residents. Accordingly, to preserve liquidity, the debtor ceased making payments under its bond obligations and suspended payments of resident entrance fee refunds, which caused the debtor to fall out of compliance with the terms of its residency agreements and with respect to New York Public Health Law. The debtor reported noncompliance to the Department of Health, which issued a citation for non-payment of nine refunds at a total amount of $5.2 million, which the DOH later updated with an addendum of 19 entrance fee refunds totaling approximately $12 million. Currently, 33 refunds totaling $20.3 million are unpaid.
According to a financial analysis summary package posted to EMMA, the debtor defaulted under the bond documents for failing to maintain a debt service coverage ratio, to meet a liquidity covenant, maintain the required amount of cash on hand covenant and make required monthly deposits. The debtor entered into forbearance agreements with the trustee, at the direction of a majority of bondholders in October 2020, November 2020 and January 2021.
This is the debtor’s second chapter 11 filing, after previously filing in 2014, during which case the company restructured Series 2007 bonds by exchanging them for the Series 2014 bonds.
Background
Incorporated in 2004, the debtor is a New York not-for-profit corporation that built and operates The Harborside, a “best-in-class” senior living community situated on approximately 8.9 acres in Port Washington, N.Y. The Harborside offers its senior residents a continuum of care in a campus-style setting, providing living accommodations and related healthcare and support services to a target market of seniors aged 62 and older. The debtor’s sole corporate member is Amsterdam Continuing Care Health System Inc., which is also a New York not-for-profit corporation.
The Harborside offers approximately 329 units of varying sizes for independent, “enriched” and skilled nursing care, with 26 enriched housing units, 18 special needs assisted living residence units (also licensed as enhanced assisted living residence units) and 56 skilled nursing beds in its Isaac H. Tuttle Health Center to provide short-term rehabilitation and long-term care to its residents and to individuals living in the community who enter into an admissions agreement. The Tuttle Health Center is certified for Medicare and Medicaid and is also licensed by the New York State Department of Health. Approximately 10% of residents in the Tuttle Health Center are covered by Medicaid.
The debtor is a party to an administrative services agreement with affiliate Amsterdam Consulting LLC (assigned from affiliate Amerstam Services Corp.) through which Amsterdam Consulting provides administrative, supervisory and fiscal advisory and consulting services for the skilled nursing facility component of The Harborside. The debtor paid $163,894 in administrative services fees for the fiscal year ended Dec. 31, 2020. The debtor also receives financial advisory support from GMSC New York LLC under a contract that expires in October 2022 and marketing advisory support from GCD New York in connection with a marketing advisory services agreement executed upon the effective date of the 2014 chapter 11 case, which also expires in October 2022.
The debtor offers prospective independent living residents the choice of three residency plans, differing with respect to the required entrance fees (which are used primarily to pay refunds to outgoing residents, pay certain project costs, retire debt, cover operating expenses and generate investment income for the facility and its residents), monthly service fees and the amount that potentially can be refunded thereunder. Entrance fees in 2021 paid by residents before they occupy a unit range from $527,249 to $2.2 million. Monthly service fees range from $2,593 to $8,089.
The debtor provides the following financial overview for the four months ended April 30 in an EMMA filing:
The company’s corporate organizational structure is below:
With the sole exception of the $1.2 million PPP loan, the debtor’s list of 30 largest unsecured creditors consists entirely of entrance fees owed to residents ranging from $855,213 to $1.4 million.
The case representatives are as follows:
| Representatives | |||
| Role | Name | Firm | Location |
|---|---|---|---|
| Debtor's Counsel | Thomas R. Califano | Sidley Austin |
New York |
| William E. Curtin | |||
| Shafaq Hasan | |||
| Jackson T. Garvey | Chicago | ||
| Debtor's Investment Banker |
N/A | RBC Capital Markets |
N/A |
| Counsel to UMB Bank, as Bond Trustee |
Daniel Bleck | Mintz, Levin, Cohn, Ferris, Glovsky and Popeo |
Boston |
| Counsel to Amsterdam Continuing Care Health System |
Ted A. Berkowitz | Moritt Hock & Hamroff |
New York |
| Allison Arotsky | Garden City, N.Y. | ||
| Debtor's Claims Agent |
Robert Jordan | Kurtzman Carson Consultants |
El Segundo, Calif. |
Plan of Reorganization / Disclosure Statement
The debtor’s plan sets forth the following classification of allowed claims and interests:
Treatment of Claims and Interests
The debtor’s plan sets forth the following classification of and proposed distributions to holders of allowed claims and interests:
- Class 1- Other priority claims: Payment in full in cash.
- Class 2 - Other secured claims: At the sole and exclusive option of the reorganized debtor: (a) cash equal to the amount of such claims, (b) the collateral securing the claims, (c) reinstatement of the claims or (d) such other treatment that renders the claims unimpaired in accordance with section 1124 of the Bankruptcy Code.
- Class 3 - Bond claims: Class 3 consists of claims relating to the Series 2014A bonds, Series 2014B bonds and Series 2014C bonds in allowed amounts to be determined. Each holder of Series 2014A bonds and Series 2014B bonds would exchange the then-outstanding 2014A bonds and 2014B bonds for a pro rata share of 2021B bonds to be issued in the aggregate original principal amount of $127.3 million. Series 2014C bonds would be canceled on the effective date (or as soon as reasonably practicable thereafter) without any payment or consideration.
- Class 4 - General unsecured claims (including bondholder deficiency claims): Payment in cash of 15% of the allowed amount of the claims. Bondholders would receive no distribution on account of any deficiency claims but would retain the right to vote their deficiency claims.
- Class 5 - Resident refund claims: Class 5 consists of claims all currently due and owing claims for refunds of entrance fees paid by each permanent resident of The Harborside pursuant to certain residency agreements and applicable New York State law. Holders of allowed Class 5 claims would receive payment in the full face amount of their claim without interest.
- Class 6 - Intercompany claims: Extinguished without distribution.
- Class 7 - Interests: On the effective date, interests in the debtor would be reinstated.
Existing bondholders would purchase up to $40.7 million in Series 2021A bonds, which would be issued as tax-exempt to the extent permitted by bond counsel. The proceeds of the new bonds would be used to fund a $20.8 million repayment of refund obligations, $9 million for the MLR, with the remainder to fund a debt service reserve fund, a contingency and cost of issuance. The Series 2021A bonds would be secured by a first priority lien on all assets of the debtor, except the liquidity support agreement. They would accrue interest at 9% and mature Jan. 1, 2041. Payments would be interest only for the first five years (through fiscal year 2025) payable semiannually, with principal to start amortizing beginning fiscal year 2026 over a 15-year period. The bonds would be subject to optional redemption at par in year 10 and would also be subject to optional redemption at a make whole redemption price from year five to year 10.
The amortization schedule for the Series 2021A bonds is below:
Series 2014A/B Bonds Exchanged for Series 2021B Bonds
The Series 2014A bonds and Series 2014B bonds (in the current aggregate principal amount of $139.9 million) would be exchanged for new Series 2021B bonds in a principal amount equal to 91% of the current principal amount and would be subordinate in payment and security to the Series 2021A bonds. The Series 2021B bonds would be secured by a first priority lien on all of the debtor’s assets, except the liquidity support agreement, and subject to the payment priority of the Series 2021A bonds. The bonds would mature Jan. 1, 2058. Interest on the Series 2021B bonds would be reduced “from the current fixed blended rate of 6.613% to a fixed rate of 5.0% per annum.” Interest would increase by 25 basis points upon the earlier of “(i) incurrence of indebtedness for Phase II, (ii) 20 years from the Effective Date and (iii) the Borrower has 150 DCOH above the MLR Requirement.” Payments on the Series 2021B bonds would be interest only for the first 20 years, paid semiannually, with principal to start amortizing beginning fiscal year 2040, provided that the Series 2021B bonds would be subject to mandatory redemption from “Excess Cash” after the Series 2021A bonds are paid in full. The Series 2021B bonds would not be subject to optional redemption for the first five years but would be thereafter as follows:
The amortization schedule for the Series 2021B bonds is as follows:
Series 2014C Bonds
The Series 2014C bonds (which have accreted value as of Feb. 25 of $67.5 million) would be canceled in whole without any payment or consideration.
Milestones
The plan support agreement includes the following milestones:
- Interim cash collateral order: Entered by June 22 (within eight days of petition date);
- Final cash collateral order: Entered by July 14 (within 30 days of petition date);
- DS order: Entered by July 30;
- Confirmation order: Entered by Aug. 25; and
- Plan effective date: Sept. 8.
Other Plan Provisions
As of the effective date, the members of the board of directors and officers of the debtor as of the petition date would remain in their current capacities as directors and officers of the reorganized debtor unless otherwise disclosed in the plan supplement.
The plan provides for mutual releases between (i) the debtor; (ii) the reorganized debtor; (iii) the 2014 bond trustee; (iv) the holders of the 2014 bonds that are parties to the plan support agreement; (v) the debtor’s sole member, Amsterdam Continuing Care Health System Inc., (vi) Nassau County Industrial Development Agency, in its capacity as the issuer under the 2014 indenture, (vii) the 2021 bond trustee; and (viii) the to-be-determined issuer pursuant to the 2021 Indenture.
In addition, the plan includes an exculpation provision in favor of (i) the debtor; (ii) the reorganized debtor; (iii) the 2014 bond trustee and the 2021 bond trustee; (iv) the holders of the 2014 bonds that are parties to the plan support agreement; and (v) the Amsterdam Continuing Care Health System Inc. and its board, affiliates, professionals, employees and advisors.
The liquidation analysis and financial projections have not been provided and remain bracketed in the DS on file.
The debtor also seeks to assume the plan support agreement.
Cash Collateral Motion
The company seeks authority to use approximately $7.5 million of cash collateral of the 2014 bond trustee UMB Bank. The debtor says that access to cash collateral is “critical” to its ability to fund postpetition operations that will allow The Harborside to continue to provide “competent nursing care and enriched housing services.”
The company proposes the following adequate protection to UMB Bank: replacement liens, allowed superpriority administrative expense claims, financial reporting requirements and compliance with bond documents (including maintenance, insurance, taxes and title). The replacement lien would attach to the postpetition bond collateral and supplemental collateral, consisting of all proceeds, rents, products and profits.
Under the adequate protection package, chapter 5 avoidance actions would not be included in the postpetition collateral securing the replacement lien, but UMB reserves the right to request that the postpetition collateral include avoidance actions in any final order.
The company would be prohibited from using UMB’s cash collateral to: (i) object to, or contest in any manner, or raise any defense to, the validity, amount, extent, perfection, priority or enforceability of the Series 2014 bonds, the prepetition bond collateral, the bond claim or any liens or security interests with respect thereto; (ii) assert any claims or defenses or causes of action against UMB, the bondholders, including causes of action related to the Series 2014 bonds or any chapter 5 avoidance actions, including with respect to payments made pursuant to the bond documents; (iii) pay any prepetition claims, except to the extent provided for in the budget; (iv) seek to modify any of the rights granted to UMB; or (v) seek to bifurcate any UMB’s claims.
In addition, the debtor proposes a waiver of the estates’ right to seek to surcharge its collateral pursuant to Bankruptcy Code section 506(c) and the “equities of the case” exception under section 552(b).
The carve-out for professional fees is $675,000.
The lien challenge deadline is 75 days from the entry of the interim cash collateral order. The UCC’s lien investigation budget is $10,000.
The proposed cash collateral budget is HERE.
Other Motions
The debtor also filed various standard first day motions, including the following:
- Motion to continue escrowing and refunding resident entrance fees in the ordinary course of business
- The company seeks authority to escrow entrance fees paid by residents who move into the debtor’s facility after the petition date in the debtor’s prepetition escrow account during the case and refund entrance fees under certain circumstances.
- Motion to pay employee wages and benefits
- The company seeks to pay compensation obligations, maintain all employee benefit obligations and pay all payroll taxes and make payroll deduction obligations. The debtor’s average bi-weekly net payroll amount is approximately $130,000, and, as of the petition date, the company owes approximately $95,544.46 in accrued prepetition wages and obligations. The company also estimates that as of the petition date there is $122,248.99 in outstanding accrued PTO.
- Motion to use cash management system
- The company has nine debtor-held bank accounts (excluding sub-accounts) with New York Community Bank and Amalgamated Bank and 11 accounts with UMB Bank.
- Motion to maintain insurance programs
- Motion to pay taxes and fees
- The company seeks to pay certain taxes and fees in the interim period as follows:
- Motion to provide utilities with adequate assurance
- Motion to waive appointment of patient care ombudsman and allow debtor to self-report
- Motion to implement procedures to maintain and protect confidential resident information
- Motion to set Aug. 3 as the general bar date and Dec. 13 as the governmental bar date for filing proofs of claim
- Motion to establish case management procedures
- Application to appoint Kurtzman Carson Consultants as claims agent
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