Buyer identified to take Friendship Village of Schaumburg out of bankruptcy
The recent bankruptcy auction for the 46-year-old Friendship Village of Schaumburg retirement community has identified a buyer scheduled to receive court approval on Nov. 8.
That buyer - Encore Healthcare Services of New York - had played the role of "stalking horse" in the auction by offering the minimum acceptable bid, which has since been increased to a purchase price of $114.8 million.
What was already known at the time was that Encore had a proven record of reliability in the industry and had committed to $15 million in capital improvements at Friendship Village beyond its purchase bid.
Friendship Village President & CEO Mike Flynn said he's spoken with some residents whose anxiety over the bankruptcy protection process that began in June has been relieved by reaching this stage.
Some further positive steps have included the amount of charitable contributions Encore is committing to as well as improvements to the entrance fee reimbursement schedule for current residents, he added.
The prevailing bidder is hoped to be made official Nov. 8 with the expectation of a closing date within 60 days after that, Flynn said.
Friendship Village officials have blamed the COVID-19 pandemic for their decision to seek bankruptcy protection back in June.
The pandemic halted tours of the community for nearly a year, causing a dip in the typical rate of eight to 10 sales per month, they said.
While Friendship Village has operated under a nonprofit model, much of the bidding interest has come from for-profit companies, officials said.
These companies' expectation is that getting the community's residency numbers up again can quickly restore its profitability, officials added.
Friendship Village is the largest continuing care retirement community in the state and can accommodate up to 1,000 residents.
The stalking horse bidder would receive a breakup fee of just more than $1 million for the work already done if another firm still ends up buying Friendship Village.
Under the pending agreement, former residents seeking repayment of entrance fees would split a payment of $2 million while current residents would be able to collect on their share over time from $76.6 million of the purchase price.
For current residents, 25% of their entrance fee would be repaid within three years of the closing, 35% within four years, 40% within seven years, 55% by 10 years, 75% by 13 years, 85% before 16 years and 100% only after 16 years.
Encore also is committing to a $50,000 per year in charitable contributions and $25,000 per year to its employees for educational assistance.