(Bloomberg) -- Residents owed $130 million after their senior living community went bankrupt are poised to suffer big losses but won’t be left empty-handed under a sale agreement approved by a New York federal court.
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Current and former residents of The Harborside, a 329-unit continuing-care retirement community in Port Washington on Long Island’s North Shore, are anticipated to receive an initial $6 million distribution after a sale of the facility for $86 million to Chicago-based private equity firm Focus Healthcare Partners, according to a plan approved by a bankruptcy court on Thursday.
They would also get additional distributions including as much as $36 million in the next one to two years after the senior home’s affiliate, Amsterdam Nursing Home Corp., sells its skilled-nursing facility on New York City’s Upper West Side.
The accord is a bittersweet victory for the home’s residents.
The senior citizens put down hundreds of thousands of dollars or more in exchange for an apartment and unlimited health care and were promised as much as 90% of the entrance fee refunded if they moved or died. The facility’s bankruptcy, however, voided those contracts, and the residents were at risk of losing everything. Many now expect to receive only a fraction of their initial outlay, which ran as high as $1 million for some units.
“This is not a good result in the abstract,” said US Bankruptcy Judge Alan S. Trust, who presided over the case at the US Bankruptcy Court for the Eastern District of New York. “In the reality of the circumstances, this is the best available result.”
Twenty-one residents of the Harborside’s nursing home and assisted living units who require extensive medical care will be forced to relocate. The Harborside has submitted a closing plan to the state Department of Health that provides for the safe transfer or discharge of residents, and must identify at least three facilities where they can be housed. About 70 people in its independent-living units have the option to stay.
Joshua Shapiro, whose 93-year-old mother recently moved out of the Harborside, praised Judge Trust for refusing to approve a deal unless residents received some compensation.
“If it hadn’t been for him pushing, there’s no way in hell the sponsor would’ve coughed up a penny and it would’ve been bupkis for the families,” Shapiro said, using the Yiddish word for “nothing.”