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Debt Management Law News

October 22, 2009

Erickson Retirement Communities files for Chapter 11

Erickson Retirement Communities LLC, the developer and manager of Highland Springs in Dallas, has filed for Chapter 11 bankruptcy and reached an agreement to sell its assets to Redwood Capital Investments, Erickson officials said Tuesday.

Neither the court filing nor the sale should mean any changes for residents at Erickson's 19 centers nationwide or jeopardize their refundable entrance fee deposits, which can top $250,000, company spokesman Mel Tansill said.

Though Erickson develops and manages the communities, separate nonprofit corporations control them. Residents' entrance fee deposits are held by the individual nonprofit communities, not by Erickson, he explained.

Erickson said the recession has battered the development arm of its privately held business, as seniors have postponed moving into retirement communities because they've been unable or unwilling to sell their homes in a weak market.

"No other continuing care company was trying to build as many large communities," said Robert Kramer, president of the National Investment Center for the Seniors Housing and Care Industry. "Erickson got caught in a bad housing market."

Maryland-based Erickson said it filed a voluntary petition for Chapter 11 in U.S. Bankruptcy Court in Dallas to restructure its debt, reorganize its real estate and management businesses into two separate entities, and prepare for a sale.

Redwood Capital is an investment company controlled by Baltimore businessman Jim Davis.

The terms of Redwood's offer weren't disclosed. The transaction is subject to court approval, which Erickson said it expects in early 2010.

"This is actually a positive development, since the new owners will bring an infusion of needed capital," Kramer said. "I don't think anyone who lives at an Erickson community should worry. Life will go on as before."

Erickson has 23,000 residents in 19 communities in 11 states.

There are 447 residents at Highland Springs in Far North Dallas and 486 residents at Erickson's other Texas community, Eagle's Trace in Houston.

Sometimes, debt can be overwhelming, and bankruptcy becomes necessary.
Bankruptcy can sometimes be difficult. If you are considering bankruptcy, contact the Houston bankruptcy lawyers of Weston & Associates, PLLC at 713-623-4242

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