A senior living company with 15 communities in seven states is working on a Chapter 11 bankruptcy plan that would provide them with the funds they need while reducing some of their debt in the process.
American Eagle Delaware Holding Company and its subsidiary Eagle Senior Living received confirmation in US bankruptcy court this week that the District of Delaware can proceed with a plan to restructure its debt while gaining more financial flexibility.
The plan includes the sale of two senior living communities, rate cuts on Eagle’s bond debt and a debt reduction of approximately $40 million, and $28 million in new funds through the exchange of 2018 bonds for newer 2018 bonds Year 2022, according to David Gordon. Partner at Polsinelli, the law firm representing the company in bankruptcy proceedings.
American Eagle “will emerge from Chapter 11 a better, stronger company with a better balance sheet,” he told Senior Housing News.
The $28 million loan will fund all of the company’s investments over the next four years, Gordon added.
Eagle Senior Living, based in Ann Arbor, Michigan, purchased a portfolio of 16 senior living communities from Brookdale Senior Living (NYSE: BDK) in late 2018. By 2020, however, the company faced unforeseen challenges related to the Covid-19 pandemic, which caused a drop in occupancy and ultimately caused the company to default on the terms of its bonds.
“The Debtors continue to battle labor shortages and employee retention issues, including due to elevated Covid-19 positivity rates among their current employees, immunization orders and competition from other industries for the Debtors’ workforce,” said a court document filed in March as part of the bankruptcy proceedings company.
As of December 31, 2021, the Company’s nearly 1,200-unit portfolio had an occupancy rate of 81.4%.
All that remains to complete the Chapter 11 restructuring is bond reissuance, which will happen in June when Eagle completes the sale of its Vista Lake community in Florida, which was auctioned off as part of the bankruptcy proceedings. The company also sold another underperforming Florida municipality in the bankruptcy auction.
Illuminate Healthcare was the winner for the community. The sale is expected to be completed in the coming months.