Sears Methodist settles proceeds distribution and employee use claims

By Caroline Salls

Pittsburgh, Oct. 29 – Sears Methodist Retirement System, Inc. reached a proposed claim settlement with several parties, according to a notice from revenue bond trustee Wells Fargo Bank, NA

The trustee said the Sears Methodist debtors were entitled to $1.35 million in refunds from a wholly owned subsidiary, and the debtors consented to the fact that these proceeds are subject to the liens of the trustee and agreed that the proceeds will be distributed first to holders of valid liens.

Under the proposed settlement, Sears Methodist will distribute funds first to the costs of the wind-down of the insurance subsidiary and then to holders to valid liens. The trustee said there can be no assurances as to the amount of funds that will be distributed, notwithstanding the company’s reference to $1.35 million in the disclosure statement for its Chapter 11 plan.

Wells Fargo said the settlement also calls for $25,000 to be set aside in order to pay a former resident of the facility a portion of her entrance fee refund when it becomes due. According to the settlement agreement, this resident’s residency agreement provided for her to receive a refund of 90% of her entrance fee of $84,900. The buyer of the facility agreed to pay two-thirds of the refund, with Sears Methodist paying the balance.

In addition, the settlement addresses calls for the set-off amounts owed in connection with the use of employees of Texas Senior Management, Inc. in the operation of the Courtyards facility, which was adjacent to Sears Methodist’s Parks facility. The Courtyards has agreed to pay $30,000 to Sears Methodist on Jan. 4.

A hearing is scheduled for Nov. 12.

According to the notice, Sears Methodist is continuing to wind down its bankruptcy estate.

Sears Methodist is a Dallas-based nonprofit senior living provider that emerged from bankruptcy on March 16, 2015.

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