Mon 10/31/2022 17:15 PM
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Relevant Document:
Notice (Oct. 31)

Bond trustee UMB Bank issued a subsequent notice of events of default by Legacy Cares Inc., outlining a series of proposed remedies for the events of default, including acceleration, receivership, foreclosure and the filing of a lawsuit seeking to enforce its rights. The trustee discloses that during a bondholder call, currently scheduled for Wednesday, Nov. 2, it will seek direction from bondholders with respect to any enforcement of the indenture and the necessary consent for the trustee to negotiate and prepare a forbearance and accommodation agreement.

The trustee previously issued a notice of events of default on Oct. 27.

At the Nov. 2 telephonic meeting, the trustee is seeking to convene a group of registered owners for the purpose of formally establishing a directing holders group, which would comprise registered owners of a majority in aggregate principal amount of the bonds outstanding. The directing holders group has “the right, at any time, to the extent permitted by law, by an instrument or instruments in writing executed and delivered to the Trustee …, to direct the time, method, and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Indenture.” The trustee is also seeking “a written direction and indemnity instructing the Trustee to, among other things, follow the strategic direction of the Directing Holders Group, as communicated in writing from time to time.” As outlined above, the trustee is in the process of obtaining formal direction from the directing holders group with respect to the remediation of the events of default by the borrower.

Regarding the potential forbearance agreement, the trustee explains that any such agreement will likely include the following terms:
  • Forbearance period: a date-specific period during which, subject to the occurrence of a termination event, the trustee (as directed by the directing holders group) “will agree that it will not exercise certain rights or remedies available to the Trustee upon the Events of Default specified in the Forbearance Agreement as of the date of the Forbearance Agreement,” subject to certain conditions related to the trustee’s rights;
  • Conditions precedent: a set of conditions precedent required to induce forbearance by the trustee, including, without limitation, the submission by the borrower of a reasonably detailed plan for the remediation of the specified events of default;
  • Termination events: a set of events or conditions under which the forbearance agreement shall automatically terminate; and
  • Tolling: an acknowledgement and affirmation of the tolling of any statute of limitations period with respect to the specified defaults or any remedies available to the trustee or the registered owners.
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