Friendship Village of Schaumburg files Chapter 11 bankruptcy

By Sarah Lizee

Olympia, Wash., June 9 – Evangelical Retirement Homes of Greater Chicago, Inc., which does business as Friendship Village of Schaumburg, filed Chapter 11 bankruptcy on Friday in the U.S. Bankruptcy Court for the Northern District of Illinois.

The debtor said in court documents that the Covid-19 pandemic dealt a hard blow to its business model, and in the months that followed, it did what it could to cope with what became a hostile business climate for continuing care retirement communities (CCRCs).

After months of financial losses, the debtor, which was financed by bondholders that had secured claims of more than $130 million, informed the bond trustee that it could no longer afford to pay debt service on the bonds.

The parties agreed that the best option was to find another CCRC operator to affiliate with. The debtor engaged BC Ziegler and Co. as adviser to help with the process.

In August 2022, the adviser received letters of interest from a handful of entities who expressed interest in acquiring the debtor or its assets. However, the debtor and bond trustee were disappointed with the amount of all of the bids received.

However, talks continued with a high bidder for about six months. But, on April 17, the bid was withdrawn.

The debtor is now hoping to use the Chapter 11 proceedings to implement a sale process for its campus and identify a stalking horse bidder by Aug. 28, followed by an auction on Oct. 3 and closing of the sale in December 2023.

The debtor said it will be filing a motion that seeks approval to use the cash collateral of the bond trustee.

In its petition, the debtor listed 200 to 999 creditors, $10 million to $50 million in assets and $100 million to $500 million in liabilities.

Its largest unsecured creditor is UMB Bank, NA, based in St. Louis, with a $75.43 million bondholder deficiency claim.

Dopkelaw LLC is acting as general bankruptcy counsel, and Polsinelli PC is acting as co-counsel.

The Schaumburg, Ill.-based retirement community filed bankruptcy under Chapter 11 case number 23-07541.

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