The retiree community files a second bankruptcy
An upscale retirement community in Port Washington has filed for bankruptcy against its creditors for the second time in seven years, records show.
Amsterdam at Harborside, a nonprofit that opened in 2010, has stopped repaying debts and reimbursing residents’ entrance fees during the pandemic. As a result, the installation of 329 units no longer complies with state law, according to documents filed last week in the U.S. bankruptcy court in Central Islip.
Amsterdam officials said on Tuesday “there will be no layoffs, cutbacks or disruption” of services for the 375 people who live in the facility.
In the filing, Amsterdam CEO James Davis said the coronavirus had “exacerbated” the facility’s “historic financial challenges” of not being able to attract enough new residents to pay the daily bills and reimbursements of entrance fees due to relatives of deceased residents.
The same challenges, along with the 2007-09 recession, led Amsterdam to seek bankruptcy protection in July 2014, according to Newsday articles from the period.
The retiree community at 300 East Overlook left bankruptcy court in early 2015 after restructuring its debt, including tax-exempt bonds issued by the Nassau County Industrial Development Agency. The community also received $ 550,000 in land tax relief from IDA over nine years. This was in addition to a 25-year tax deal reached in 2007, according to the articles.
“Seven years ago, no one could have predicted that a global pandemic would strike in 2020 and the effect it would have on our cash flow,” Davis said in a statement Tuesday.
“We have developed a viable plan to restructure our debt, give us better cash flow and get us back on track financially,” he said. “This is a situation that can be resolved.”
Davis said Amsterdam would leave bankruptcy court in September if creditors and the court approve another debt restructuring.
The plan calls for the issuance of $ 41 million of tax-exempt bonds bearing an interest rate of 9%, as well as the replacement of $ 140 million of 2014 bonds bearing an interest rate of 6, 6% by new bonds bearing a rate of 5%. An additional $ 67.5 million in 2014 bonds would be canceled, the file said.
The parent of the retirement community would contribute $ 18 million to the restructuring, according to the file.
Among the largest creditors are 33 families seeking reimbursement of entrance fees totaling more than $ 20 million. Five have filed lawsuits, says the bankruptcy filing.
Potential residents often sell their homes to pay the Amsterdam entrance fee, which ranges between $ 527,250 and $ 2.2 million, depending on the size of the housing unit. There is also a monthly service charge of between $ 2,600 and $ 8,100 for meals and amenities, such as a heated indoor pool and underground parking, depending on the record.
The retiree community consists of independent living, assisted living and skilled nursing units.
The debts include a $ 1.2 million paycheck protection program loan, which is part of the federal government’s flagship initiative to help businesses and nonprofits survive COVID-19. The federally guaranteed bank loan should be canceled, the file said.
The loan helps pay for the 107 employees in Amsterdam and about 100 others who are either independent contractors or provided by recruiting agencies to work in the dining room and park the cars, Davis said.
He and other Amsterdam officials are expected to discuss the new bankruptcy filing at Thursday’s IDA meeting.
“We are closely monitoring bankruptcy court proceedings,” IDA President Richard Kessel said on Tuesday. “We want to see Amsterdam survive, but it’s a complicated question. We will listen to their demand for IDA to issue new tax-exempt bonds as part of the debt restructuring.
He continued: “There will be no change” to the tax deals granted by IDA in Amsterdam and no additional tax savings.
Kessel said the bankruptcy filing “does not appear to have a negative impact on the county or its taxpayers.”