Eagle Senior Living asks Chapter 11 to achieve a “balanced and sustainable capital structure”

Eagle Senior Living, based in Wilmington, DE, has filed a voluntary Chapter 11 proceeding in the U.S. Bankruptcy Court for the District of Delaware in a move it hopes will strengthen its financial structure and will provide the flexibility to make necessary capital improvements.

Eagle Senior Living’s parent company, American Eagle Lifecare Corp., and management company, Greenbrier Senior Living, are not included in the filing. Greenbrier continues to manage all communities.

The pre-arranged deposit will allow Eagle to operate uninterrupted and “achieve a more balanced and sustainable capital structure, creating a stronger foundation for the long-term success of their communities,” according to a press release issued Friday by American Eagle Delaware Holding Co. .

“While never ideal, in limited cases the bankruptcy of an aged living and care community can ultimately be beneficial to the community, its residents and its constituents,” said attorney George Mesires, co- Head of the Senior Living & Care team at Faegre Drinker. McKnight Business Daily. “A pre-negotiated bankruptcy filing, where a broad group of settlors carefully negotiate the terms of a restructuring before a filing, is generally much smoother than a plummeting Chapter 11, which can significantly destroy value and cause a uncertainty among constituents.”

Todd Topliff, chairman of American Eagle Delaware Holdings, said the company is working “diligently” with bondholders “to address the impacts of the COVID-19 pandemic, strengthen our long-term financial health and better position Eagle Senior. Living to continue to provide high quality care and amenities to all residents.

In a pre-negotiated bankruptcy case, Mesires said, creditors often voluntarily agree to forgive debt to ease the burden on the community and provide cash for working capital needs or capital expenditures.

“Pre-negotiated cases can signal to the market that a bankruptcy filing is broadly supported and will cause minimal disruption to the community and its most important constituency, the residents,” he said.