Judge wants new proposals from both sides in Bartlett senior living facility's bankruptcy case

A federal judge Tuesday instructed the creditors' committee and bondholders of Clare Oaks Senior Living in Bartlett to simplify their conflicting proposals to resolve the retirement community's bankruptcy and diminish their adversarial tone.

A hearing on what they come up with has been scheduled for July 28.

Clare Oaks is a little more than a year past its Chapter 11 bankruptcy filing, but a proposed restructuring plan from investors in May triggered accusations of self-serving greed and a counterproposal by the continuing care retirement community's creditors' committee, whose interests have been aligned with those of the management.

The investors, in turn, have characterized the committee's rival plan as patently unworkable and a deceptive alternative to put before residents. Their attorneys compared it to a political candidate running for an office he or she is not eligible to hold.

Judge Donald R. Cassling told both sides during Tuesday's call-in hearing he wants them to tone down their disagreement and offer a clear explanation of the alternatives for Clare Oaks residents.

"I believe concrete hard facts are much more persuasive than fiery rhetoric," Cassling said, adding that he would not let either side's proposal proceed in their current form.

Cassling said the Clare Oaks creditors' committee's description of the investors' plan as bringing them "profit" to be an inaccurate use of the term, as well as inflammatory and prejudicial. However, Cassling added that investors had not proved the committee's plan was unworkable.

Cassling criticized the investors' description of their plan as a "minor" alteration of residents' existing contracts, and for obscuring the true impact on residents.

Investors say their plan could allow residents to recover a portion of the deposits they've made for the costs of their care. The alternative is a sale of Clare Oaks to a third party, in which deposits would be forfeited, they say.

But among that plan's critics are state Rep. Diane Pappas of Itasca. The Democratic lawmaker said the residents of Clare Oaks are unfairly in danger of losing their life savings from the investors' proposed restructuring plan.

"This is a terrible injustice for these senior citizens," Pappas said before Tuesday's hearing. "It's just unconscionable, and that's not what bankruptcy is supposed to be."

Attorneys for the investors did not respond to a request for comment Tuesday.