New protections OKed at some Erickson campuses
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Judge Stacey Jernigan has approved Erickson Retirement's requests for additional, temporary protections for new residents at some of its communities, the company says. While the bankruptcy process goes on, Erickson will escrow new residents' entrance fees and give them a money-back guarantee if they move out -- whether or not their unit is resold to a new person. But only during the bankruptcy proceeding, which will last for at least several months in Erickson's case and often drags on for more than a year in others. To get this deal you have to be at an eligible community (See below. The Maryland communities are not eligible).
The guarantee lasts only as long as the bankruptcy process, the company says. If you stay in the community after Erickson corporate emerges from bankruptcy, the rules revert to the way they were before: You don't get your money back unless your community can sell the unit to a new resident for at least what you paid. If the apartment fetches less than what you paid, you get a lesser amount back. These are still and always have been the rules at most Erickson campuses.
Says Erickson spokesman Mel Tansill: "Once Erickson emerges from Chapter 11, this incentive expires and the entrance deposits will be moved from escrow and treated as all other residents' deposits, subject to the terms of the Residence & Care Agreement."
The entrance fees can run up to $600,000. For developing communities that are part of the bankruptcy process, the increased protections are intended to reassure people who might think twice about buying into a Chapter 11 situation.
Here are the Erickson communities that ARE offering the money-back protections, according to information supplied by Tansill: Ann's Choice and Maris Grove (PA); Fox Run Village (MI); Eagles Trace and Highland Springs (TX); Wind Crest (CO); Tall Grass Creek (KS); and Ashby Ponds (VA).
Here are the communities that are NOT offering the new deal. These are either 1) "mature" communities that are owned by a nonprofit and therefore shielded from the bankruptcy process or 2) communities that were financed with public bonds and are not directly part of the bankruptcy proceeding for that reason: Greenspring (VA); Charlestown, Riderwood and Oak Crest (MD); Henry Ford Village (MI); Seabrook and Cedar Crest (NJ); Brooksby Village (MA); Sedgebrook and Monarch Landing in IL; and Linden Ponds in MA.
Here is the full email from Tansill:
The protection of initial entrance deposits is not being challenged. The judge overseeing our proceedings has granted our motion to allow new initial entrance deposits to be escrowed, and returned without the condition that the residence is re-settled, if the resident leaves before Erickson emerges from Chapter 11. What is at issue is to which lenders those initial entrance deposits will go after Erickson’s emergence; a hearing has been scheduled for January 13 to address that issue – that’s all. In the meantime, Erickson can move forward with its incentive program.As I previously noted to you, Erickson wants to continue to welcome as many new residents as possible. To create an incentive -- and an added reassurance -- for prospective residents to move in during Erickson's filing, the company has implemented a short-term offer whereby a resident could move in and, if he or she decided to leave while the company remains in Chapter 11,
could receive their deposit refund before their unit is re-occupied (normally, departing residents receive a refund of their entrance
deposit when their unit is re-occupied, in accordance with the terms of the Residence & Care Agreement that is in effect at all communities). The mechanism for accomplishing this incentive is to establish a temporary escrow account for new entrance deposits that is not subject to the terms of the Residence & Care Agreement's refund policy.This temporary escrowed initial entrance deposit program is not available at all communities. Greenspring (VA); Charlestown, Riderwood and Oak Crest (MD); Henry Ford Village (MI); Seabrook (NJ); Brooksby Village (MA); and Cedar Crest (NJ) are not part of the bankruptcy filing. In addition, the bonded communities – Sedgebrook and Monarch Landing in IL, and Linden Ponds in MA -- are not part of the bankruptcy because they are financed via public bonds.
Once Erickson emerges from Chapter 11, this incentive expires and the entrance deposits will be moved from escrow and treated as all other residents' deposits, subject to the terms of the Residence & Care Agreement.
Comments
That's great news for the residents, but what about the employees who were let go and cannot file for unemployment because of how the bankruptcy is affecting the serverance and PTO payout issues? Has Erickson made provisions to pay the employees as outlined in the severance letters they sent out?
Posted by: Former Employee | November 24, 2009 1:35 PM
I understand another party has entered the fray, and now Redwood has competion to take over Erickson. Does anyone have any info on this second party?
Posted by: Interested Party | December 16, 2009 9:28 AM
i am a prospective tenant of Linden Ponds in Massachusetts. Has the plan to leave bankruptcy by erickson been approved by the court? How is Linden Ponds affected? Anxious to know the latest info.
Harold D. Berger
Posted by: Harold D. Berger | January 31, 2010 12:15 PM