January 28, 2022 – The Court hearing the Prospect-Woodward Home case has extended the periods during which the Debtor has an exclusive right to file a Chapter 11 Plan, and solicit acceptances thereof, through and including February 26, 2022. and June 26, 2022 respectively [Docket No. 364]. Absent the requested relief, the Plan filing and solicitation periods were scheduled to expire on December 28, 2021 and February 26, 2022, respectively.

The order on exclusivity extensions was an uncontested matter at a January 28th hearing at which the Debtor had also hoped to have its Disclosure Statement approved (the Debtor's first cut of their Plan and Disclosure Statement filed on December 30th). That, however, has not happened; with the Court issuing an order [Docket No. 365] "directing the Debtor to submit a revised Plan and Disclosure Statement on or before February 16, 2022" and scheduling a hearing to consider the adequacy of the apparently inadequate Disclosure Statement now scheduled for March 7th.

The hold-up follows objections filed by various creditors urging the Court to send the Debtor “back to the drawing board” in respect of their Plan and Disclosure Statement; with alleged shortcomings including inadequate information and the impermissable combining of the Plan and Disclosure Statement into a single document. Creditors are also objecting to the Debtor's proposal to make a $24.7mn interim payment of asset sale proceeds to bond trustee UMB Bank ($93.0mn of revenue bonds issued in 2017) and to treatment which does not leave them in better shape than they would be in Chapter 7, which is exactly where the Debtor should be according to several of its creditors.

Adding to the Debtor's list of Disclosure Statement-related headaches is an objection from the U.S. Trustee assigned to its case as to proposed third-party releases and an opt-out mechanism for those releases.

Background

On August 30th, The Prospect-Woodward Home (dba Hillside Village Keene, “Prospect-Woodward” or the “Debtor") filed for Chapter 11 protection noting estimated assets between $10.0mn to $50.0mn; and estimated liabilities between $50.0mn and $100.0mn. At filing, the Debtor, which operates an assisted living home in Keene, NH, cited "the discovery of significant construction defects upon the opening of its new facility coupled with the governmental emergency orders resulting from the COVID-19 global pandemic" as leaving it "unable to achieve its marketing goals and generate sufficient revenue from the sale of life care contracts to fulfill its obligations under its long-term tax-exempt bond indebtedness…" and hence necessitating bankruptcy protection.

On November 22nd, the Court hearing the Prospect-Woodward Home case issued an order approving a $33.0mn sale of substantially all of the Debtor’s asset to Covenant Living Communities and Services (the “Purchaser” or "Covenant") [Docket No. 317].

The Purchaser describes itself as “one of the largest not-for-profit retirement living organizations in the nation, with 16 communities in nine states.”

The Extension Motion

The extension motion explains, “First, though the Sale Order has been entered, the sale has not yet closed and as the Debtor has previously disclosed, the sale is not expected to close until at least February 1, 2022. Second, the Debtor is shortly planning on filing a plan of liquidation, which has previously been shared with counsel to the Bond Trustee and the Committee. Third, the Debtor has been paying, and will continue to pay its undisputed postpetition debts and have operated its businesses in the ordinary course since the filing of the Chapter 11 Case. Thus, no creditor or party in interest is prejudiced by the relief requested herein. Fourth, the Debtors commenced these cases 120 days ago and this is the Debtor’s first request for an extension of the Exclusivity Periods. The relief requested herein is a good faith effort to establish a viable plan strategy and exit from bankruptcy. The Debtor does not file this motion with the intent of harming key constituencies or unduly causing delay. Accordingly, the Debtor’s submit that “cause” exists to extend the Exclusivity Periods.”

Prepetition Indebtedness

As of the Petition Date, the Debtor owes a total of approximately $96,856,450.46 consisting of bond obligations, construction loan obligations and unsecured obligations (collectively, the “Debt Obligations”).

About the Debtor

According to the Debtor: “One-of-a-kind Hillside Village Keene retirement community opened its doors to residents in 2019. We’re a casual, warm and welcoming not-for-profit senior living community of like-minded — yet-open-minded — down-to-earth people who value culture, initiative, diversity, personal growth, volunteerism, camaraderie and generosity."

The Debtor further states, "Hillside Village Keene, Senior Living Community, is managed by industry leader Life Care Services®, an LCS® Company, based in Des Moines, Iowa. Since 1971, Life Care Services has provided operations management, marketing and sales management for life plan communities, independent living, and assisted living, memory care, and health services nationwide."

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