(Updates with occupancy figure in fourth paragraph.)
Nov. 15 (Bloomberg) -- The Clare at Water Tower, an upscale residence for elderly people in Chicago, filed for bankruptcy protection from creditors after failing to make debt payments.
Assets and liabilities were each as much as $500 million, the not-for-profit facility said in a Chapter 11 filing dated yesterday in U.S. Bankruptcy Court in Chicago. The Clare defaulted on bond debt of $229 million in September. Revenue has fallen amid the U.S. economic slowdown, said Judy Amiano, chief executive officer of Clare’s developer, Franciscan Sisters of Chicago Service Corp.
“Prospective senior residents are having difficulty selling their homes and have lost significant amounts of their retirement funds in the financial market, making it difficult, if not impossible, for them to move into or remain in senior housing facilities,” Amiano said in court papers.
The Clare, a retirement and health-care facility for people over 62, opened in December 2008. Before opening, it had deposits for 220 of its 248 independent living units, the Clare said. As of Nov. 1, 82 units were occupied, an occupancy rate of 33 percent, according to court papers.
Construction of the 53-story building on Chicago’s Gold Coast was funded by a $229 million municipal bond offering. Bank of New York Mellon Corp. is the trustee for the bonds. Bank of America Corp. provided the Clare with a $137.5 million letter of credit.
The Clare has a 99-year lease on land owned by Loyola University, the largest unsecured creditor with $1.54 million in unpaid rent. Other unsecured creditors include the city of Chicago for a development obligation of $453,519 and Greystone Development of Irving, Texas, for a contract claim of $356,200.
The residence seeks court approval to borrow as much as $12 million from Redwood Capital Management LLC while in bankruptcy, according to a filing.
“The Clare is dangerously close to running out of working capital,” Amiano said in her declaration.
The case is The Clare at Water Tower, 11-46151, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).
--Editors: Stephen Farr, Peter Blumberg
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