Epworth Villa files Chapter 11 bankruptcy with over $50 million in debt

By Sarah Lizee

Olympia, Wash., Oct. 2 – Central Oklahoma United Methodist Retirement Facility, Inc., which does business as Epworth Villa, filed Chapter 11 bankruptcy on Friday in the U.S. Bankruptcy Court for the Western District of Oklahoma.

Epworth Villa, a retirement living community located in Oklahoma City, currently has about $76.46 million of outstanding notes payable to the Oklahoma County Finance Authority.

The debtor said it is operating with extremely limited access to liquidity. Since December 2021, Epworth Villa has been depositing into an escrow account at the Trust Co. of Oklahoma entrance fees paid by new residents.

On Sept. 13, 2022, Epworth Villa and BancFirst, as successor indenture trustee, entered into a forbearance agreement under which the existing bond trustee authorized Epworth Villa to use its revenues to pay budgeted expenses under an approved budget subject to certain variances.

The debtor said it does not have sufficient available sources of working capital and financing to operate its business or maintain its properties in the ordinary course of business during the pendency of this Chapter 11 case without debtor-in-possession financing and the authorized use of the cash collateral.

As such, the company is seeking approval of a private placement of up to $4 million in taxable senior lien bonds or corporate taxable senior lien bonds via clients of Hamlin Capital Management, LLC for the purpose of funding a DIP loan.

Interest will be set at two business days before closing at a rate equal to the two-year Treasury rate plus 450 basis points, with a floor of 8¾%. Interest will be fixed through maturity, which is two years.

The company said the DIP facility and the use of cash collateral will provide the liquidity necessary to stabilize and fund the debtor’s operations during the case as each seeks to preserve and maximize the value of its estate for the benefit of all parties in interest, and to efficiently reorganize.

“Without the proposed DIP facility and authorization to use cash collateral, rather than reorganizing, the debtor’s estate could be required to undertake a liquidation process on a highly expedited basis and, in that scenario, secured creditor recoveries would likely be materially impaired when compared to recoveries available if the debtor is able to access the proposed DIP facility and use cash collateral,” the debtor said in court documents.

In its petition, the company listed 100 to 199 creditors, $10 million to $50 million in assets and $50 million to $100 million in liabilities.

The retirement living community is based in Oklahoma City. The Chapter 11 case number is 23-12607.

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