Developer of DuPage, Lake Co. retirement centers goes bankrupt

Erickson Retirement Communities LLC, a developer of 20 senior living campuses including in Naperville and Lincolnshire, has filed for bankruptcy, a move that owners say will not affect the residents living there.

Erickson reported that Redwood Capital Investments LLC has agreed to act as lead bidder for the company's assets. Erickson, based in Baltimore, listed more than $1 billion dollars in assets and liabilities in filings Monday in federal bankruptcy court in Dallas. The company operates Monarch Landing in Naperville and Sedgebrook in Lincolnshire. The 351 residents living at Monarch Landing and 527 residents at Sedgebrook will see no change in the operations of the facilities, Erickson spokesman Mel Tansill said Tuesday afternoon.

"The only impact that the residents at these campuses will notice is that there is no more construction of new buildings taking place," Tansill said.

He added that the local campuses are about halfway complete.

"There are still residents moving in," Tansill said.

He added that there are seven communities that are in the developmental stages where construction has been suspended until the debt is resolved.

Erickson has two core businesses that make up the company - the management arm and real estate development arm. The management arm, which provides services, care and amenities for community residents continues to operate successfully, Tansill said. "The management side is rock solid," he added.

The real estate side, which acquires land for future campus growth, has been significantly impacted by the recession, Tansill said. "The construction side is where all the debt happened. We were in a high growth mode until the economic crisis hit. We halted the construction months ago," Tansill said.

Erickson develops campuses that not-for-profit corporations unaffiliated with Erickson operate and typically contract with Erickson to manage. When campuses are complete, the not-for-profit corporations typically buy the communities from Erickson.

Meanwhile, Redwood's offer, which is undisclosed, would be subject to competing bids and court approval. Company officials said it's "in the best interests" of its creditors to seek bankruptcy with a proposed plan which would include "a sale of substantially all its assets" to Redwood, or a higher bidder, according to the filings.

At least 14 related entities also filed for bankruptcy protection Tuesday. Erickson has retirement communities in Pennsylvania, Texas, Virginia, Massachusetts, Maryland, Michigan, New Jersey, and Kansas, as well as Illinois, according to its Web site.