Sears Methodist confirmed reorganization plan to take effect March 16

By Kali Hays

New York, March 13 – Sears Methodist Retirement System, Inc.’s amended Chapter 11 plan of reorganization will take effect on March 16, according to a Friday notice with the U.S. Bankruptcy Court for the Northern District of Texas.

As previously reported, the plan received court confirmation on March 6.

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 a disclosure statement.

Sears Methodist has sold substantially all assets of the eight subsidiaries with proceeds totaling $91.94 million.

All sales include the assignment of the facilities, the property leases and residential contracts to the buyers, allowing 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 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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