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February 12, 2019 – The Court hearing the SQLC Senior Living Center at Corpus Christi (d/b/a Mirador) case authorized (i) the asset purchase agreement dated February 8, 2019 (the ‘Stalking Horse APA’ which is attached to the order) with Ronald E. Jennette, Trustee, as trustee of the Aldergate Trust (the ‘Stalking Horse’), (ii) the Debtor’s proposed bid protections and (iii) the break-up fee agreed between the Debtor and the Stalking Horse [Docket No. 46]. Further to the Stalking Horse APA, the parties have agreed a purchase price to be comprised of $20.35mn and certain assumed liabilities, the latter notably including residence agreements and former residence agreements (ie the contracts between the Debtor and its senior residents).
As previously reported [Docket No. 15], “After a lengthy marketing process and substantial discussions with the Indenture Trustee and the Residents Council, the Debtor entered into an Asset Purchase Agreement dated February 7, 2019 (the ‘Stalking Horse APA’) with Ronald E. Jennette, Trustee, as trustee of the Aldergate Trust, a Texas trust (an affiliate of Methodist Retirement Communities, Inc.) (the ‘Stalking Horse’). In accordance with the Stalking Horse APA, the Debtor agreed to sell and the Stalking Horse agreed to buy substantially all of the Debtor’s assets, including the Facility (the ‘Assets’) Free and Clear (as defined in the Stalking Horse APA) of any or all liens, claims and interests, except as otherwise set forth in the Plan, pursuant to a sale under section 363 of the Bankruptcy Code, for $20,350,000 in cash plus the assumption of certain liabilities (the ‘Transaction’), subject to higher and better offers through a competitive auction process (the ‘Bidding Process’). Pursuant to the Stalking Horse APA, the Stalking Horse shall assume all liabilities in connection with Residence Agreements (as defined in the Stalking Horse APA) and Executory Former Residence Agreements (as defined in the Stalking Horse APA), with no modifications thereto and the Residents shall retain their rights under such agreements, including any right to a Resident Refund.”
Key terms of the Stalking Horse APA
- Assets to be sold: Substantially all of Debtor’s assets, right and properties pertaining to or used in connection with the business of and operation of the Facility.
- Purchase Consideration: $20.35mn payable in cash plus the assumption by the Stalking Horse of the Assumed Liabilities (including residence agreements and former residence agreements).
- Financing: The Stalking Horse APA does not provide a financing contingency.
- Break-up fee: $750k
- Deposit: $375k (the “Initial Deposit”) paid by the Stalking Horse upon signing of the Letter of Intent (the “LOI”) as an initial purchase price deposit. Upon entry of the Bid Procedures Order, such Initial Deposit shall be increased by $375k for a total deposit in the amount of $750k (the “Deposit”), and the Deposit shall become nonrefundable (except in the event of Debtor’s default or failure of any Closing Conditions to be satisfied/waived) and shall be credited toward the purchase price or retained by Seller as liquidated damages
- Buyer’s Closing Conditions: The Stalking Horse is not required to close unless, among other things, (a) Debtor has performed its covenants in all material respects, (b) the representations and warranties of Debtor are true and correct in all material respects, (c) Debtor has conveyed to the Stalking Horse the Real Property, free and clear of all Liens, except Permitted Liens; (d) Debtor has caused the Bond Financing to be satisfied in full and all Liens related thereto released; (e) Debtor has obtained all required governmental approvals; (f) the Court has entered a bid procedures order by February 18, 2019; (g) the Court has entered an order approving the sale by April 19, 2019 and such order has become final by May 3, 2019; and (h) Debtor has provided evidence of the termination of the current Manager of the Real Property.
- Debtor’s Closing Conditions: Debtor is not required to close unless (a) the Stalking Horse has performed its covenants in all material respects, (b) the representations and warranties of the Stalking Horse are true and correct in all material respects, (c) the Court has entered a final order approving the sale, (d) the Stalking Horse has delivered or caused to be delivered to Debtor on the Closing each of the required Transaction Documents, and (e) the Post Closing Licensee has entered into the OTA (and if required therein, an interim management agreement and a sublease), (f) there is no Order, judgment or injunction or no proceeding pending or threatened challenging the Contemplated Transaction; (g) the Stalking Horse shall have paid Cure Costs.
The Court scheduled the following dates:
- Bid Deadline: March 29, 2019
- Auction: April 3, 2019
- Objection Deadline: April 10, 2019
- Sale Hearing: April 15, 2019
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