South Franklin Circle says court approves disclosure statement, confirms prepackaged plan

By Lisa Kerner

Charlotte, N.C., Dec. 3 - South Franklin Circle's disclosure statement was approved and its amended prepackaged reorganization plan was confirmed, according to a Monday filing with the U.S. Bankruptcy Court for the Northern District of Ohio and an attorney familiar with the case.

As previously reported, South Franklin's prepackaged plan, filed on Oct. 25, is based on a restructuring agreement with Hamlin Capital Management, LLC.

To implement the balance sheet restructuring, the company will replace its current $100.6 million of secured debt with $66.75 million of new bond and term note secured debt. Of that amount, $17.75 million will be subordinated long-term debt.

In addition, South Franklin may borrow up to $550,000 for working capital purposes.

South Franklin said its senior secured debt will be reduced by more than 50% and its total secured debt by about 40% under the proposed restructuring.

Creditor treatment

Treatment of creditors will include the following:

• Pre-bankruptcy secured lenders will receive a combination of cash and new term note debt in exchange for cancellation and discharge of their claims.

The company said the cash will come from the net proceeds of $41 million in new bonds to be issued by the County of Geauga, Ohio. Those bonds will be held by bondholder investors who are accredited investors and/or qualified institutional buyers for which Hamlin serves as investment adviser;

• Non-tax priority claims and general unsecured claims will be reinstated and paid in the ordinary course of business;

• Other secured claims will be reinstated; and

• Judson Services, Inc. will retain all membership interests in reorganized South Franklin Circle, which will continue to exist as a nonprofit entity.

South Franklin Circle is a Chagrin Falls, Ohio-based nonprofit continuing care retirement community. The Chapter 11 case number is 12-17804.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.