Sears Methodist Retirement System Inc. is a not-for-profit company that provides senior living services in Texas. It started its first community for seniors in 1966 and gradually expanded. It serves more than 1,500 residents and has an almost equal number of staff members.
The retirement company faced huge debts from various creditors and recently tried to restructure the debts. However, when the restructuring negotiations did not turn successful, it filed for Chapter 11 bankruptcy in the federal district court in Dallas. After a thorough consideration of the business and reorganization, the company’s board of directors voted to file for bankruptcy.
The court documents listed 20 of the largest unsecured creditors. Most of the creditors listed on the documents included East Texas businesses. The non-profit corporation’s spokeswoman stated that all the unsecured creditors will have a chance to participate in the Chapter 11 case. This can be done by appointing a committee that represents their interests. A motion to jointly administer and consolidate the bankruptcy cases was granted by the judge.
The funded debt obligations of the company, which are almost $160 million, involve its operations at three veteran homes and eight senior living communities in Texas. According to the spokeswoman, the non-profit corporation received approval from the court to borrow $600,000 from existing bondholders after it informed the court of its inability to continue operations without funds.
Also, most senior living communities will be unaffected by the bankruptcy filing. Those facilities will remain open, staffed and equipped to handle the needs of the residents. The spokeswoman stated that the board of trustees decided to voluntarily file for Chapter 11 as it would allow them to financially restructure their debts.
Managing huge debts is not easy for any business and filing for Chapter 11 bankruptcy can help the business owners reorganize their debts. This may allow the business owners to get a fresh financial start. However, filing for bankruptcy may require professional guidance to ensure that the business owners understand the benefits and drawbacks of the filings.
Source: Tyler Morning Telegraph, “Meadow Lake to remain to open despite bankruptcy filing,” Casey Murphy, 18 June 2014