The Clare Oaks retirement community in Bartlett, built on land owned by an order of nuns in a plan to secure their own retirement, has emerged from a yearlong bankruptcy.
Interim executive director Marty Jensen said there were talks in mid-2011 between the community and bond holders about doing a restructuring, but they couldn't come to an agreement.
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"The best thing to do was file for Chapter 11 and go through the process to restructure the debt," he said of the nonprofit's bankruptcy filing. "The challenge was we didn't have enough money to run the community and pay all the debt service."
A new financial plan for the community -- which houses nearly 300 independent living, assisted living and nursing center residents -- was approved in November by the Northern Illinois bankruptcy court. New bonds were issued on Dec. 20 by the Illinois Finance Authority.
Those bonds amounted to about $89 million, replacing the $112.7 million in revenue bonds issued prior to the community opening in 2007. The community also set aside about $9 million in reserves.
"Those are set up in various funds that are put in place just to protect us as we go forward," Jensen said.
Clare Oaks is the brainchild of the Sisters of St. Joseph of the Third Order of St. Francis. They decided to use the 90 acres of oak woodlands they owned that surround the order's convent in Bartlett to help support the order's retired nuns.
At the time, 169 working nuns in the order were supporting 182 retired nuns over age 70. Between not being able to draw Social Security for years worked before 1972 and their practice of working for low wages, the older nuns had contributed very little to their retirement plans.
The sale of half the land to single-family homebuilders and the conversion of the other half into the $112 million retirement community, which some of the nuns moved into, was a saving grace.
As part of the financial restructuring, Jensen said, the sisters sold the retirement center land to Clare Oaks, which is managed by Life Care Services LLC, for about $4.5 million.
The sisters could not be reached for comment, but it is believed the funds from the land sale will continue to assist in funding the retirements of any current or yet to be retired sisters.
While the sisters' role has changed from sponsor to founder, Jensen said they remain a vibrant part of the day-to-day operations, as about 40 of them live there and a handful serve on the board.
"It's not like they just washed their hands of this," he said. "They will still be an active part of the community."
During the bankruptcy, residents didn't see any changes in services, Jensen said. If anything, they saw improvements, as the community was "given a breather" from paying its debts, enabling it to catch up on capital projects, he said.
"All of the things that we did, we focused on the common areas and water and heating systems, kitchens, et cetera," he said.
Jensen said the community also maintained good operating revenues through the bankruptcy.
In 2012, Jensen said, there were 166 residents occupying 126 of the 164 independent living apartments. Out of 120 nursing residences, 94 were filled, and 29 people occupied the 33 assisted living residences, he said.
"We feel like those occupancy rates are going to continue to go up," Jensen said.
Between November and December, four new deposits were made, Jensen said, and he expects some of the dozen or so people who came to visit during the bankruptcy but were leery to put money down, will return soon.
"We feel like people walk in, they look at Clare Oaks and they say this is a great place," he said, adding that the community will celebrate its five-year anniversary in February with many employees and residents who have been there since its opening. "I think this community is really going to see things just be wonderful as it goes forward. It's just a good place to enjoy life."