Sears Methodist’s amended disclosure statement approved by court

By Kali Hays

New York, Jan. 16 – Sears Methodist Retirement System, Inc. received approval of an amended disclosure statement related to its proposed plan of reorganization on Friday from the U.S. Bankruptcy Court for the Northern District of Texas.

A hearing to confirm the plan is scheduled for Feb. 27.

The amended plan alters some treatment of secured creditors. An LCS secured claim will receive no distribution under the amended plan and holders of other secured claims will receive a transfer of company collateral, whereas the initial plan called for holders of secured claims to receive proceeds from a sale of the collateral.

Other terms of the amended plan remain unchanged.

As previously reported, the plan includes eight subsidiaries, while the bankruptcy cases of three other subsidiaries, Sears Brazos Retirement Corp., Canyons Senior Living LP and Odessa Methodist Housing Inc., will be dismissed as there are no assets available for liquidation after the payment of fees and expenses related to each, according to the disclosure statement.

To date, Sears Methodist has sold substantially all the assets of three subsidiaries totaling $12.84 million and is accepting offers on four additional subsidiaries with stalking horse bids totaling $62.5 million.

All of the sales include the assignment of the facilities, the property leases and residential contracts to the buyers, which allows Sears Methodist to avoid “significant hardship to residents that would otherwise occur as a result of a liquidation,” according to the disclosure statement.

Proceeds from the sale of unencumbered assets and causes of action will be transferred to a liquidating trust for the benefit of unsecured creditors. The trust will be managed by an appointed trustee who will be responsible for all distributions to holders of allowed claims.

Specific creditor treatment under the amended plan is as follows:

• Holders of priority claims and secured tax claims will be paid in full in cash;

• Holders of obligated group bond claims will receive 33% to 39% of a proportionate share of net sale proceeds excluding encumbered assets to be distributed by an obligated bond trustee;

• Holders of other secured claims will receive a transfer of company collateral;

• Holders of deficiency claims and general unsecured claims will receive a proportionate share of distributable cash in the liquidating trust; and

• Holders of interest claims in Sears Methodist or any subsidiaries will receive no distribution under the plan.

Sears Methodist is a Dallas-based nonprofit senior living provider that filed for bankruptcy on June 10, 2014. The Chapter 11 case number is 14-32821.

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