I'm curious to know how much the other end of those transactions is the real culprit. The obligation to repay the (substantial) loan to the family or estate of those who have moved on from the centers.

Jay, thanks for the update, and for running the press release in its entirety. The only thing I would add is, your description of Erickson Retirement Communities at the very beginning is not completely accurate.

Erickson is an independent living company at its core. The majority of residents are not assisted at all. While those services are indeed available at many of the communities as needed, most of the residents are extremely active and independent.

I know this seems like a small thing, but there are nursing-home stereotypes with the assisted-living term that Erickson has worked hard to try and change.

Thanks again for the post, and yes, for the purposes of full disclosure, I am an Erickson employee.

I am curious to know how much of a golden parachute the Ericksons will receive for poor management that led to the job loss of many employees and diminished resources for the communities. The company leveraged too many resources on a growth strategy that was too aggressive and not managed effectively - which was seen by many as greed rather than focusing on updating the living model to reflect the changing times and customer base.

Removing the Ericksons from control is wise. The company was run by Ericksons and/or friends of Ericksons that while well-intentioned, did not have the experience to effectively lead the company through the financial crisis. New entrepreneurial, strategic leadership like Jim Davis will put the company back on track and continue to offer quality retirement living with some much needed changes to the model.

The sad part of all of this is that seniors (like my mom at Oak Crest) who live at the Erickson Centers are finding this out by reading it in the paper or from friends and family. The stress of the "unknown" is starting to boil and the hallways are a buzz with chatter and angst. This is a terrible way to treat these people who have sold their homes and INVESTED themselvs in Erickson. Why didn't they hold townhall mettings prior to it hitting the press? Sad that may of the residents are probably having terrible stress worring about what is going to happen to their environment. Talk about poor management!

To Pam Ecker:

Employees of the company were told yesterday that John Erickson, and others on the leadership team, did hold town meetings at all of the Erickson communities over the last two weeks or so to explain to residents what the scenarios where going forward, including the possibility of Chapter 11.

Did your mom not get the message about the town meetings? If she didn't, then that was poor communication. But I was under the impression that the company tried to be as up front with residents as possible.

I agree that this is a sad and unsettling time for the Seniors at Oakcrest. But I also think that the above comment is not entirely true or fair. A thoughtful, and detailed letter from John Erickson was delivered to all Oakcrest Residents well before today's announcement. Perhaps the above commenter's Mom had not shared this with her.

I agree that this is a sad and unsettling time for the Seniors at Oakcrest. But I also think that the above comment is not entirely true or fair. A thoughtful, and detailed letter from John Erickson was delivered to all Oakcrest Residents well before today's announcement. Perhaps the above commenter's Mom had not shared this with her.

Our Executive Director at Ashby Ponds, David Gallagher and his staff, have kept us well informed throughout this process, including Town Hall meetings and letters/visits from John Erickson and our Board of Directors. We have three Town Halls planned this week, starting with the first one this morning. Erickson representatives are excellent at keeping us informed.

I am on the priority list at an Erickson community. I found out from the newspaper about this matter. A little consideration to us priority members would be nice.

Does anyone know the status of the deposits that the residents paid to live in the communities? Will the funds still be there for them when they move out? Or are the residents losing their deposits through the bankruptcy proceedings?

I agree with the above poster about the unknown regarding residents deposits (buy in fee). If only we had a crystal ball to know how an investment is going to perform we would all be millionaires. A buy in to Erickson is an investment and like any other may lose value. The promise of a return on that investment left me skeptical at best. 3 years ago when Windcrest was first built I asked this very question, "What if the company goes bankrupt?" I was assured by the touring employee that it would never happen, that the company had historically sound performance. Right then I knew that I could not recommend someone invest their nest egg in this model.

The real problems were with the leadership of this company. The founder set this company up for failure when he let it run on nepotism, always promoting his children to the highest offices despite their lack experience or ability to lead. This led to the corporation being managed more like a "mom and pop" shop as opposed to a real fortune 500 company. This coupled with very poor vision and strategy strangled the once cash cow. A lot more will come out on this. Lots of people watched this ship go down but they were too scared to say anything before it sank, for any voice of opposition was met with termination.

I thought that Erickson was a great company to work for but I do for sorry for them having to sell. The Erickson family are wonderful people, it is just that the staff that they employ are over-payed for their certain positions. Due to the layoffs many people are coming out with the dirty laundry that happens behind closed doors of administrators of Cedar Crest Village. Too many management leaders are taking advantage of their position for money among other things. Cedar Crest needs to be investigated by the new company to elimanate administrator positions that are being abused. Also the way that administration spends money on company credit cards for unpractical reasons could have something to the financial fall of the company. They go out to eat for a "business meeting" and the company has to pay for it when they easily could have had a meeting in a conference room. WASTEFUL and they should be ashamed.

Hello
I agree that this is really sad.I think Erickson is good company and this is not going good for it.Thank you very much for giving this update and information to us.

To address the question about the entrance deposit: In the verbage signed by the resident upon move in, their fully refundable entrance deposit is paid out once their apartment has been resold. (Laymans terms). That being said, they use the next person's entrance deposit to pay the person who moved out or the estste of someone who has passed. So the deposit is not at risk, but with the slow housing market, it may take longer to refill the apartment and therefore delay payment.

The important thing to note in all of this is that Erickson has an investor on board to infuse capital into the company. The bankruptcy is just a debt restructuring. They are not closing the doors and putting people on the streets. They are just trying to get more favorable terms with the lenders prior to the investor buying the company.

I have been an OCV Resident for several years--I am concerned with the much misinformation and misunderstanding that has been was posted by Jay and in the comments section.

First--the entrance deposits DO NOT GO-ARE NOT SENT TO CORPORATE.They remain with Oak Crest Village-not in escrow but deposited in an OCV account with a local bank]Oak Crest Village Inc is an independent not-for profit corporation which is separate from ERC LLC. OCV Inc. owns OCV-its assets are OCV's and its debrs are OCV's. OCV Inc has $47 million in the bank as reserves for OCV-it cannot be touched by other communities or ERC LLC Thus the entrance deposits are not used and never been used by ERC corporate to develop other communities.

On October 19th ASAP after OCV Management received word from Corporate about the filing in Dallas, the mamagement distributed a memo calling a Town meeting on October 20th with a letter from John Erickson and the Chair of the OCV Inc Board of Directors [around 9PM] in each Resident's "cubby" And before that and at around 6PM on 10-19-09 announced in the dining rooms to residents who were still eating.Understandbly not all Residents read the communications that evening. At 10 am the next day the first of 2 Town Hall meetings were held- the 2nd was at 1:30.

The bottom line is that I feel assured with the information I have read and heard from OCV Senior management and John Erickson.
I feel secure here and am not moving out. And my "grown kids" understand and I assured them that I am OK.

Hi OCV Resident: I don't believe you are correct in saying that the "entrance deposits DO NOT GO-ARE NOT SENT TO CORPORATE." But I will forward your comments to Erickson for a response. Several newer Erickson communities are listed as creditors in the bankruptcy filing -- ie., Erickson corporate owes them money. Credit analysts are telling me that residents' deposits are loaned to corporate to help finance construction of new Erickson communities.

Mr. Hancock:

The issue of what happens to the deposit entrance fee money is crucial. Could you please post it here once you get the information from Erickson. I am a prospective resident and I observe w/ angst what is transpiring.

Does the money (entrance fee/refundable deposit) stay at the non profit home/facility or go to corporate?

Thanks.

Dorothy R.G.

As I said before, the entrance deposits are paid out when the resident's apartment is resold. When it is resold, the new resident's entrance deposit is what provides the money for the refundable entrance deposit.

Please verify, but I am quite sure that is how it was set up. Places like OCV don't have much to worry about because we have over a thousand people on the waiting list. Developing communities may not be able to pay out the deposit in a timely manner if they have trouble reselling the apartment.

Also I don't understand how ERC could owe developing communities money. ERC finances construction and the community is then put on a plan to pay ERC corporate back over a set period of time.

OCV did this years ago, which is why there will be very little affect to our community. We pay ERC a fee to help manage the community. There are no other financial ties. (including the entrance deposits. they are all handeled under the OCV umbrella).

I am responding to posts to my comments on the entrance fee.
I am an OCV Resident and was only commenting about OCV and what we have been told many times in Town Meetings held here as recently as the one on Octber 20th. The OCV Executive Director, the OCV Finance officer, who is also a regional finance officer, and the OCV Resident member of the OCV Inc Board of Directors have told the residents here at OCV that our entrance deposits "stay here" in a local back and are not fowarded to ERC Corporate.They are part of the $47 million dollars in OCV's funds in a local bank.They are included among the "assets" of the independent non-profit OCV corporation.

Each community pays a management fee to Erickson for "managing the communities" . Deposits do stay in the individual community.

I think its important to look at the fact the Erickson residents live a long full, active life. The residents are always the center of everythng Erickson does. And, I am not an employee of Erickson.

I am a former Erickson resident who left due to management and policy problems. I moved out about 2 years ago and my money less what I paid for improvements was returned about 6 months later. That said, one of the major concerns I had about Erickson before we moved in was with the private corporation. None of their financial information was available to prospects as would have been the case with a public company. While this is not the primary cause for leaving it was always an underlying concern.

Sadly ERC 'leadership' is lacking. John may be a super smart man; Mark ditto, etc, but the family promotes based on friendship and religious beliefs, ie, New Life. While I worked there, it was common to have managers make religious or political statements that begged either agreement or silence. I could never decide if they were clueless or oppressive despots. However, many in management had no business sense or experience - they started with ERC as youngsters and climbed the corporate ladder. You risked your position to disagree with or question your manager, or the way business was conducted (Why are we buying land that was a dump site?). I've read quite a few comments that 'at least ERC is preserving jobs' etc - with only 250 people laid off in January 2009. Not true. Those 250 worked for Corporate, where the total number employed was approx 1100 - so almost 25% were laid off. An additional 15000 or so used to work at the communities (internally they claimed almost 1:1 parity of residents to employees). Even allowing for boastful exaggeration, they seem to have lost 3000 employees somewhere.

I, like so many others, am very saddened about the financial difficulties that Erickson is having at this time. I have been an employee at Oakcrest for a few years and have always had positive feedback regarding the company that I work for until last month. I'm still trying to figure out why I had to hear about the "filing for Chapter 11" through my family, via t.v. news, rather than a Town Hall Meeting,or from my supervisor.

We have been on the priority list at Riderwood in Silver Spring for two years now. Am very interested to know if the question has been answered as to where the entrance deposit is retained upon the move-in. Does it go to Corporate or does it stay within a bank account only accessidble to that individual community? I have not called Riderwood as yet because I would imagine they have been deluged by calls from those with more immediate concerns than mine. Thanks you for any information one of you may have.

I was laid off fron Erickson this past March. The company owes me a substantial amount of money.How to I go about getting it now that they have declared bankruptcy. What are my chances of recovery?