SCHAUMBURG, Ill. — Friendship Village of Schaumburg, an independent continuing care retirement community (CCRC) in the Chicago suburb of Schaumburg, has filed for Chapter 11 protection through the U.S. Bankruptcy Court for the Northern District of Illinois and is seeking a sale.
The community cites continued hardships from the COVID-19 pandemic. Debt on the community is largely through bond financing.
The community will continue to operate as normal during the bankruptcy process. The sale process will be subject to the bankruptcy court’s oversight.
Due to the large size of the community, the pace of sales is typically eight to 10 per month, according to a press release from the company. Without the ability to tour prospects for nearly a year, occupancy dropped significantly and has yet to fully recover.
The company has between about $100 million and $500 million in liabilities, about $10 million to $50 million in assets and between 200 and 999 creditors, according to local newspaper Daily Herald, which cited the 38-page bankruptcy filing. The largest creditor is listed as UMB Bank, which holds an unsecured claim of about $75.4 million, the filing indicates.
With Friendship Village being an entrance-fee model, that press release also tackled the issue of what will happen with entrance fee refunds. During the restructuring process, deposits received from residents who move in after April 17, 2023, will be held in escrow under an escrow agreement to protect the deposited funds throughout the realignment process.
This means that the escrowed deposits will not be available to the community until the realignment occurs and new residents decide whether to stay in the community. Upon a successful realignment, residents have the choice to stay and have their escrowed deposits satisfy their entrance fee requirement, or to move out and be refunded their escrowed deposit in full.
Established in 1977, Friendship Village is Illinois’s largest seniors housing community and the 16th largest CCRC in the United States. When fully occupied, the community is home to nearly 1,000 seniors.